Russian Billionaire's Bank Braces for More U.S. SanctionsBy
Sanctions haven’t changed Kremlin policy: RenCap’s Charlier
Bank’s trading revenue rose last month on sanctions volatility
There’s a high chance that U.S. President Donald Trump’s administration imposes more sanctions on Russia, according to billionaire Mikhail Prokhorov’s Renaissance Capital.
The U.S. Treasury in April penalized individuals and listed companies it sees as close to the Kremlin, including Oleg Deripaska, who, like Prokhorov, made his fortune in metals. The measures roiled Russian markets and underscored the worsening tensions between the two nuclear powers.
“It seems like this is not the last wave,” Christophe Charlier, chairman of the Moscow-based investment bank, said in an interview in Lagos, Nigeria’s commercial capital. “It’s not changing the politics or the diplomacy of the Russian state and, therefore, some of the things that have led to sanctions may continue and there may be more sanctions.”
Russia’s economy was faltering even before the latest penalties took effect, with gross domestic product expanding a lower-than-forecast 1.3 percent on an annualized basis in the first quarter. Goldman Sachs Group Inc. is among banks predicting that the sanctions could further hinder economic activity and investment.
The ruble has weakened 7.4 percent against the dollar this quarter, the worst performance among major emerging-market currencies after Argentina’s peso, Turkey’s lira and Brazil’s real. The RTS Index of stocks has fallen almost 5 percent, while the government’s ruble bonds are down 8.3 percent in dollar terms, more than the average for emerging markets of 5.2 percent, according to data compiled by Bloomberg.
Renaissance Capital, which isn’t among the entities sanctioned and operates across emerging markets, saw its trading revenue rise last month thanks to the spike in volatility.
“In the first few days after the sanctions were announced, there was a lot of activity in the Russian market,” Charlier said. “As a broker, we had some incredibly profitable days. Some of the best days we’ve had, probably, in a decade. But that’s not the way you like to make money, not when it the market gets hit by something else. Obviously, that’s not necessarily sustainable. May has been a tougher month.”
Investors would hope that if Trump’s government decides on more punishments, their impact is not as far-reaching as those in April, he said.
“People we’ve done business with are on that list,” he said of the new sanctions. “Indirectly, it affects us. Discussions with clients in New York and London have become more difficult.”
— With assistance by Jake Rudnitsky