New Russia sanctions disrupt major Intesa loan syndication

Italian bank Intesa Sanpaolo has encountered problems syndicating a loan to Glencore and Qatar’s wealth fund to finance their purchase of a stake in the Kremlin-controlled oil major Rosneft because of new US sanctions against Russia.

Four banking sources told Reuters that Western banks including from the United States and France have so far put on hold their participation in the syndication of the 5.2 billion euro ($6.13 billion) loan that Intesa provided last year.

Intesa (ISP.MI) invited about 15 banks to join the loan when it opened the syndication in May. A loan of this size would normally take between four and six weeks to syndicate, though deals involving emerging markets can sometimes take a few weeks longer.

The banking sources said their compliance departments needed to understand the new sanctions.

They also said the syndication was complicated by a political stand-off between Qatar and Saudi Arabia. Banks are taking a more cautious approach to deals involving Qatar as they are wary of damaging their relations with Saudi Arabia and the other three Gulf nations embroiled in the dispute.

“The syndication is stuck because of new US sanctions on Russia. The new sanctions are so wide-reaching that they will surely impact all similar deals involving Russian state firms,” said a London-based source with a large Western bank invited by Intesa to participate in the syndication.

Intesa, Italy’s largest retail bank, declined to comment. The banking sources did not want themselves or their banks to be named because they were not cleared to speak about the deal and because talks between Intesa and the banks about the syndication are confidential.

Last month, Washington imposed new sanctions on Russia in the strongest action against Moscow since 2014 following Russia’s annexation of Crimea and incursion in east Ukraine.

The new round of sanctions was in part a response to conclusions by U.S. intelligence agencies that Russia meddled in the 2016 U.S. presidential election. The sanctions dashed hopes of a rapprochement between Moscow and Washington.

The syndication was meant to spread the risk for Intesa which has so far lent all of the money. The loan helped commodities house Glencore (GLEN.L) and the Qatar Investment Authority buy 19.5 percent in Rosneft (ROSN.MM) to help the Russian government plug budget holes.

The Italian government says the loan is compliant with the new sanctions.