President of Ukraine

Ukraine calls on bosses of US, European banks to sever ties with groups that trade Russian oil, stop lending to Russian war crimes – Oleg Ustenko

16 July 2022 - 19:04

Economic advisor to the President of Ukraine Oleg Ustenko wrote to bankers including JPMorgan Chase's Jamie Dimon and HSBC's Noel Quinn, asking them to stop financing companies that trade Russian oil and sell shares in state-backed oil and gas groups Gazprom and Rosneft. This is stated in an article of the Financial Times (the UK).

In the letters, which were sent this week and also went to Citigroup and Crédit Agricole, banks were accused of "prolonging" the war by providing credit to companies that ship Russian oil and told they would be blocked from participating in the postwar reconstruction of Ukraine.

Ustenko told the FT that Ukraine intends to sue the banks at the International Criminal Court (ICC) once the war ends, and that Ukraine's security services were collecting information on the financial institutions supporting Russian fossil fuels.

"In my view they are committing war crimes because they are helping the Putin regime in this specific way and they are supporting the regime," he said, arguing that Russian oil and gas revenues fund the purchasing of rockets and missiles used against Ukrainians.

HSBC's and Crédit Agricole's asset management arms hold shares in Gazprom and Rosneft, Russia's state oil and gas firms. Citigroup provides credit facilities to Russian oil and gas giant Lukoil and to Vitol, which trades in Russian oil, according to the letters.

JPMorgan extends credit lines to Vitol, while its Russian Securities investment trust holds stakes in Gazprom, Sberbank and Rosneft, described in the letter as some of the Kremlin's most important economic assets.

The President's adviser is particularly angry at JPMorgan after it published an analyst note warning that attempts to impose a price cap on Russian oil could drive global prices to a "stratospheric $380/bbl."

In the letter to Dimon, Ustenko said that the note was "scaremongering, based on poor quality analysis" and also complained that it referred to the situation in Ukraine as a "crisis" rather than a Russian invasion.

In a statement, JPMorgan said it played an active role in implementing western sanctions.

"Managing these evolving sanctions has been an enormous undertaking for all global financial institutions, who have quickly and diligently implemented multilateral sanctions on Russia's major banks, its central bank, companies and individuals," it added.

Citigroup and Crédit Agricole did not respond to Ustenko's comments directly, but reiterated their previous statements about suspending and paring back activities in Russia. HSBC declined to comment. HSBC and Citigroup are in talks with potential acquirers for their local businesses.

Privately, bankers noted that it has been impossible to divest some of their Russian holdings owing to sanctions. Vitol said it has cut its Russian oil business by 80% since the invasion and that the remaining volumes all comply with western sanctions, which were designed to keep Russian oil flowing.