- Refraining would bring firm in line with other U.S. banks
- State Department had discouraged firms from participating
Goldman Sachs Group Inc. will probably join the list of international banks refraining from helping Russia sell debt after U.S. officials urged Wall Street to stay out of the deal, according to a person briefed on the situation.
While the investment bank initially told Russian authorities it was interested in participating, senior executives have since reconsidered amid talks with the State Department, the person said, asking not to be identified because the deliberations are private. Russian publication RBC reported Tuesday that the New York-based firm had rethought its pursuit of the sale.
Goldman Sachs’s decision brings it in line with North American banks including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Morgan Stanley that chose not to bid, according to people familiar with their decisions. The Wall Street Journal reported earlier Wednesday that the other U.S. banks had abstained.
Russia, mired in a recession amid low oil prices and a widening deficit, has budgeted for a placement of as much as $3 billion in Eurobonds this year. It contacted more than two dozen firms around the world, seeking to return to foreign debt markets after the annexation of Crimea triggered international sanctions. The State and Treasury departments told U.S. banks last month that participating in a sale would run counter to the nation’s foreign policy, even if it’s not explicitly barred by sanctions, people familiar with the talks said last week.
Russian Deputy Finance Minister Sergey Storchak later told reporters many banks didn’t respond to a request for proposals to organize the sovereign Eurobond sale. He declined last week to say how many banks didn’t respond to Russia’s entreaty. “We have banks to choose from,” he said at the time.
While U.S. and European Union sanctions target corporations and individuals, at least some U.S. banks decided to steer clear of helping Russia’s government before the State Department weighed in, some of the people said.
“A return to business as usual with Russia” poses both economic and reputational risks, the State Department said in a statement last week. “It is essential that private companies -- in the U.S., EU, and around the world -- understand that Russia will remain a high-risk market so long as its actions to destabilize Ukraine continue.”