European Banks Ink Loan to Russian Steelmaker

By Alexis Flynn 

A syndicate of European banks, including Dutch lender ING Bank NV, has inked a financing deal with Russian steelmaker Evraz PLC worth hundreds of millions of dollars, just weeks after the European Union tightened sanctions against Moscow for its alleged backing of Ukrainian separatists blamed for downing the Malaysia Airlines MH17 passenger plane.

The $425 million five-year loan, arranged by Germany's Deutsche Bank AG, ING, Stockholm-based Nordea Bank, French bank Société Générale SA and Austria's Raiffeisen Bank International AG, shows some European banks are still prepared to do business in Russia, even as their U.S. and U.K. counterparts dial back their involvement amid growing Western antagonism toward the Kremlin.

The syndicated loan is the first major lending transaction with a major Russian company since the EU and U.S. ratcheted up sanctions against Russia in late July, according to data from Dealogic.

A Nordea Bank spokesman declined to comment, save to say that the bank "follows all applicable sanctions, both from the EU and the U.S."

Deutsche Bank declined to comment. Raiffeisen Bank said its corporate strategy had not changed and that it wanted to keep its corporate business in Russia at its current level. "Due to the slow growth of the Russian economy we are proceeding cautiously and are following a policy of selective underwriting, with a focus on relationship customers and market leaders," the bank said. "This lending policy is not linked to the sanctions. RBI complies with all applicable sanctions" said bank spokeswoman Ingrid Krenn-Ditz.

ING and Societe Generale declined to comment.

London-listed Evraz, which announced the financing deal Wednesday, hasn't been named on any U.S. or EU sanctions lists, and neither has its controlling shareholder, oligarch billionaire Roman Abramovich, who also owns London soccer team Chelsea.

Although Mr. Abramovich isn't directly linked to Russian President Vladimir Putin, prominent Kremlin critic Alexei Navalny has called on the U.S. to sanction him, describing the oligarch as "a member of Mr. Putin's inner circle" in an op-ed for the New York Times in March.

A fresh raft of sanctions aimed squarely at Russia's leading energy and financial services firms, announced in the wake of the MH17 tragedy in late July, were supposed to have made investors wary of doing business in the country.

The sanctions, which prohibit Russian state banks from raising long-term financing in the EU and stop European firms from exporting oil industry technology to Russia, were also designed to harm the powerful elite around Mr. Putin.

The shooting down of the Malaysia Airlines jet, which killed all 298 passengers and crew on board, and the pro-Russian rebels' obstruction of the crash site appeared to have hardened the attitudes of many EU nations against Moscow, including Italy, Germany, the U.K. and the Netherlands, where many of the victims came from.

"The sanctions are intended to punish specific companies, but also to indirectly discourage doing business with other companies," said Alexander Kliment, director of emerging markets strategy at Eurasia Group. "Western banks may still be prepared to lend to non-sanctioned Russian companies, the question is at what price."

Ben Edwards, Nicole Lundeen in Vienna and Martin van Tartwijk in Amsterdam contributed to this article