Lloyds Bank, part-owned by the British government, has withdrawn from a U.S. $1.5-$2 billion trade finance deal involving oil major Rosneft, in a development highlighting the growing unease among Western banks in funding Russian deals, Prime reported on June 4.
Lloyds, along with Deutsche Bank, HSBC and Bank of China was a mandated lead arranger (MLA) on the loan to finance BP's purchase of crude oil and refined products from Rosneft.
The loan would be similar to previous such deals Rosneft had with BP or trading houses Glencore and Vitol but, according to banking sources close to the deal, Lloyds decided to walk away after several weeks of hesitation.
The bank is 25%-owned by the U.K. government, which has repeatedly condemned Russia over its actions in Crimea and eastern Ukraine. Rosneft's powerful chief Igor Sechin was hit by U.S. sanctions as part of a broader move to punish Russia for the annexation of Crimea.
"Lloyds' decision to leave the deal is because it does not want to embarrass the government, considering the current political situation with Russia," said one of the bankers. "I think it was scared of going upstairs to ask permission."
Copyright: Prime, 2014