More British businesses need to urgently cut any ties with Russia to “inflict maximum economic pain – and to stop further bloodshed,” Chancellor Rishi Sunak urged today.
Western blue-chips have been severing ties with Moscow in a combined effort to freeze Russia out of the global economy.
The likes of Shell and BP are in the process of ditching Russian assets, including a stake in the Nord Stream 2 pipeline and a near 20 per cent ownership of Kremlin-backed energy firm Rosneft respectively.
Sunak urged British firms to go further to ratchet up the Western economic retaliation to the Kremlin’s invasion of Ukraine.
The Chancellor said he welcomed “commitments already made by a number of firms to divest from Russian assets,” adding the government will support any firms cutting ties with Moscow.
However, the Treasury sent a clear message to fund managers considering hoovering up Russian assets after their prices collapsed due to tough Western sanctions.
“There is no case for new investment in Russia,” the Chancellor warned.
Sunak urged firms to “think very carefully about their investments in Russia” as money may help finance President Vladimir Putin’s regime.
The world’s largest asset manager, BlackRock, has reportedly booked around £13bn in losses linked to Russian assets. Pimco, a top bond investor, stands to log huge losses if Russia defaults on its debts.
Russia’s economy has been hobbled by an alliance of Western countries launching a sweeping set of sanctions, including freezing a large proportion of the country’s central bank’s reserves and locking Russian banks out of the Swift payments system.
The curbs have led several top credit rating agencies to warn a Russian default is imminent. The rouble, Russia’s currency, has collapsed to new record lows against the dollar.
President Vladimir Putin has told holders of Russian debt to expect interest payments in roubles.
The Kremlin has a £117m interest payment due on Wednesday which could tip Russia into default if investors are repaid in roubles instead of dollars.
The weak exchange rate with the dollar and euro will also mean foreign investors will book heavy losses.
America and Britain will stop importing Russian oil. The EU has yet to make such commitments.