Norway’s $1.3 billion oil fund to drop Russian investments

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Norway’s $1.3 billion oil fund will divest its Russian investments as part of a broader package of support for Ukraine, underscoring how international financial pressure on Moscow is mounting.

Norges Bank Investment Management, the sovereign wealth fund housed within Norway’s central bank, has been ordered to immediately freeze all new investment in Russia and begin unwinding its $3 billion in existing Russian holdings, according to a declaration of the Norwegian government on Sunday evening.

“Russia’s attack on Ukraine has tested Europe’s security in a way we haven’t seen since World War II,” said Jonas Gahr Støre, Prime Minister of Norway. . “It challenges our standards, our values ​​and the principles on which our democratic society is based.”

The fund – the world’s largest sovereign wealth investor – held NKr 27 billion ($3.1 billion) in shares in the country at the end of 2021, according to a spokesperson. This equates to 0.2% of NBAM’s total assets under management.

“We will implement the decisions made by the Norwegian government and will now freeze the fund’s investments in Russia, which means that we will not buy or sell shares,” NBIM said in a statement to the Financial Times. “Together with the Ministry of Finance, we will prepare a plan for disinvestment from the Russian market.”

Nicolai Tangen, managing director of the state fund and former hedge fund manager, had indicated earlier this week that he thought divesting from Russia altogether was a bad idea.

“It’s obviously a dilemma, but selling in a market is not black or white,” he told a local journal. “The Moscow stock market has fallen sharply in recent days, and if we sell our shares now, the Russian oligarchs could buy them on the cheap.”

Norway has long stressed that the sovereign wealth fund is an apolitical long-term investor, but growing pressure on the government to act more forcefully in response to the Ukrainian invasion has pushed it to act.

“Given the evolving situation, we consider it necessary to withdraw the fund from Russia,” Norwegian Finance Minister Trygve Slagsvold Vedum said in a statement.

The government also said it would allocate up to two billion crowns for humanitarian aid to Ukraine and would also provide military equipment such as helmets and protective vests. Norway has so far donated 250 million crowns in humanitarian aid following Russia’s attack on Ukraine, it said, mainly to the United Nations High Commissioner for Refugees, to the Red Cross and the United Nations Land Humanitarian Fund.

“Russia’s acts of war claim many civilian casualties, destroy basic infrastructure and drive people into exile. We are therefore increasing our humanitarian aid in the context of the Ukrainian crisis,” said Gahr Støre.

Norway said the sanctions would also isolate Russia financially “by hitting the central bank and removing a number of Russian banks from the Swift payment system”. Norwegian airspace will also be closed to Russian flights.

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