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FACTBOX-What European businesses say about Russia sanctions
August 1, 2014 / 11:17 AM / 3 years ago

FACTBOX-What European businesses say about Russia sanctions

(Adds more company reactions)

Aug 1 (Reuters) - The European Union and the United States have announced further sanctions against Russia, targeting its energy, banking and defence sectors in the strongest international action yet over Moscow’s support for rebels in eastern Ukraine.

Below are recent comments and decisions from European companies showing the potential impact on business:

* Part-nationalised British lender Royal Bank of Scotland said it had placed restrictions on its lending in Russia following developments in Ukraine.

* Russia’s three largest banks sought to assure clients and investors they had the resources necessary to fulfil obligations despite their inclusion on the EU’s latest round of sanctions for Russia’s role in the Ukraine crisis.

* Adidas, the world’s No.2 sportswear firm, cut its revenue and profit targets for this year and scrapped them for next, blaming a plunge in sales at its golf business and its exposure to a weak Russian market.

* The head of Russia’s second-largest oil producer Lukoil said Western sanctions on Russia would force the company to reduce its investment programme due to limited access to funds.

* Russia’s Megafon said it had converted its foreign currency deposits into roubles and Hong Kong dollars to protect the mobile phone operator against any further Western sanctions.

* Italy’s Enel is not considering the sale of its Russian assets at the moment, the utility’s CEO Francesco Starace said. “It is not wise to sell assets in Russia at this moment,” Starace said in a conference call.

* German retailer Metro AG said conditions are still not right to list a stake in its Russian cash-and-carry business, that was postponed in March due to the Ukraine crisis.

* Safran expects some impact on its Sagem defence electronics business as a result of new EU and U.S. sanctions on Russia, but this will not significantly affect the parent group, the head of the French aerospace company said.

* An embargo against Norilsk Nickel as part of Western sanctions against Russia would hurt nickel users in Europe and the United States rather than Norilsk itself, the head of French miner Eramet said.

* VTB, Russia’s second-largest bank by assets, said it is ready to borrow in other currencies and markets after sanctions imposed by the United States thwarted its ability to access dollar financing, a move it called “politically motivated” and “unjust”.

* Russia’s share of Finnish exports is set to halve within a year due to new international sanctions amid the Ukraine crisis, economist a Finland’s main export sector lobby said.

* Austrian Airlines, a unit of Lufthansa LHAG.DE, is seeing some impact from the crisis in Russia and Ukraine, but there will not be a visible hit at the group level, the group’s chief financial officer said.

* French oil major Total said it had stopped buying shares in Russia’s Novatek when a Malaysian airliner was shot down over Ukraine, but it was still too early to gauge the impact of the sanctions.

* Germany’s Chamber of Industry and Commerce, DIHK, expects both the Russian and German economies to suffer from the fresh sanctions, especially medium-sized German mechanical engineering companies, its chief Martin Wansleben said on Tuesday. “Russian customers are holding off placing order because they don’t know whether the Germans will be able to deliver,” he said. “And German companies are not certain whether they are allowed to deliver.”

* More than 25,000 jobs are at risk in Germany following the fresh sanctions, the German Committee on Eastern European Economic Relations said. “Further damage is looming for the European and especially the German export industry. More than 25,000 jobs are in danger in Germany alone,” it said.

* The United States has slapped sanctions on VTB, the Bank of Moscow, the Russian Agriculture Bank and the United Shipbuilding Corp over Moscow’s support for separatists in eastern Ukraine, the Treasury Department said. VTB, Russia’s second-largest bank by assets, called the sanctions “politically motivated” and “unjust” but said it was confident it could raise capital if needed.

* International credit and debit card company Visa Inc said the new wave of U.S. economic sanctions was not affecting its work in Russia and does not force it to stop serving Russian clients.

* Swedish cosmetics firm Oriflame plans to sell a lipstick factory in Russia as it moves to consolidate production in one location in the country, a real estate consultant and the company said on Tuesday. Oriflame scrapped third-quarter dividends in May and said it was trying to cut costs to help deal with “very tough conditions” in Russia and Ukraine, its two biggest markets.

* Russia’s Gazprombank met with South Korean debt investors for the first time last week as the threat of tougher sanctions risks freezing it out of funding markets in Europe.

* Oil and gas producer BP reported a sharp rise in second-quarter profits on Tuesday but warned further Western sanctions on Russia could harm its business there and its relationship with Russian state oil company Rosneft. To date, the sanctions had not had a significant effect on its business in Russia, where it makes about a third of its crude oil output, but that could change.

* French oil services firm Technip last week cut operating margin targets for its onshore/offshore unit for this year and next, citing the possible impact of sanctions on Russia and tighter spending budgets among its clients.

* Finnish telecoms equipment maker Nokia said it was not too concerned that its business would be hit by potential sanctions against Russia due to the Ukraine crisis. The company would have to balance the risks by seizing opportunities in other areas, Chief Executive Rajeev Suri told Reuters. (Additional reporting by Annika Breidthardt; Compiled by Tom Pfeiffer and Mark Potter)

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