The invasion of Ukraine following the fall of the Soviet Union in 1991 is causing a mass exodus of companies from Russia, reversing three decades of investment by Western and other foreign businesses.
The list of those cutting ties or reviewing their operations is growing by the hour as foreign governments lift sanctions against Russia, shut down airspace for its planes and give some banks SWIFT money. Messaging has been removed from the system. Some companies have concluded that both reputational and financial risks are too high to continue. Operations in Russia have become deeply problematic.
ruble It fell as much as 30% on Monday after the US banned transactions with the Russian central bank, hampering its ability to deploy its $630 billion foreign reserves to protect the currency.
For some companies, the decision to exit Russia is the conclusion of decades of lucrative, if sometimes full-blown, investments. Foreign energy majors have been pouring in money since the 1990s. Russia’s biggest foreign investor, BP Plc, led the way with its surprise announcement on Sunday that it would exit its 20% stake in state-controlled Rosneft, a move that could result in a $25 billion write-off And there could be cuts to its global oil and gas. a third of production.
The stake was the product of a protracted battle for control over TNK-BP, a joint venture between the oil giant and a group of billionaires in 2012. According to people familiar with the situation, it is now up to it to weigh whether to sell its stake back to Rosneft.
Shell plc followed on Monday. Citing Russia’s “stupid act of military aggression”, it said it was ending partnerships with state-controlled Gazprom, including its participation in the Sakhalin-II liquefied natural gas facility and the Nord Stream 2 pipeline project , which Germany blocked last week. The cost of both projects is around $3 billion. UK Business Secretary Quasi Quarteng met with Shell’s chief executive Ben van Burden on Monday to discuss the company’s involvement and welcomed the move.
“Shell has made the right call,” he tweeted. “There is now a strong moral imperative on British companies to isolate Russia. This offensive must have been a strategic failure for Putin.”
Equinor ASA, which is Norway’s largest energy company and a majority state-owned, also announced that it will begin withdrawing about $1.2 billion worth of assets from its joint ventures in Russia. “In the current situation, we consider our position to be unstable,” said CEO Anders Opedel. left the trick Exxon Mobil Corporation and total energy SE ranks as the only energy major in Russia with significant drilling operations.
Exxon oversees Sakhalin-1 along with Rosneft and companies in Japan and India, while Total Energy has a major stake in Russia’s largest independent gas producer Novatek PJSC. Total Energies CEO Patrick Payne said at a conference last Thursday that he did not see the impact of Russia’s aggression on the company’s operations because they are too far from the front. But the broader trend is in an exit direction, at least for now.
“I wouldn’t be surprised if you see more announcements about the exit,” said Alan Good, sector strategist for Morningstar. “Given the UK government there was additional pressure on BP, I am not sure that TotalEnergies will face the same pressure, as the relationship between France and Russia is different.”
When the Soviet Union fell apart, foreign companies saw enormous opportunities – a vast new market for minerals and oil with millions of consumers – and poured in to buy, sell and partner with Russian firms.
With Russia’s invasion of neighboring Ukraine, this trend has been shattered. Norway’s sovereign wealth fund, the largest in the world, said it was freezing about $2.8 billion in Russian assets and would come up with an exit plan by March 15.
Major law and accounting firms are also taking stock and potentially facing steep declines. Baker Mackenzie has so far been one of the few law firms to publicly state that it will break ties with several Russian clients to comply with sanctions. The Chicago-headquartered firm’s clients include Russia’s finance ministry and Russia’s second-largest bank VTB, which has been hit by asset freezes and sanctions by the US, UK and European Union. The law firm said on Monday it was reviewing its operations in Russia.
A Baker McKenzie spokesperson said, “We do not comment on the details of specific customer relationships, but this will mean exiting the relationship altogether in some cases.”
London-based Linkletters said in a statement that it is “reviewing all Russia-related actions of the firm.”
london firms
Some of London’s biggest law firms – including Allen & Overy and Clifford Chance – either failed to respond to questions about their handling of Russian clients or declined to comment. London’s courts have long been a battleground for wealthy Russians seeking to settle disputes over business deals and settle failed marriages. British judges promise a justice system that provides a fair trial even in case of disputes with doubtful money.
Other firms have come under fire for not getting out completely. Bob Sternfels, global managing partner at McKinsey & Company, took to LinkedIn on Sunday to condemn the Russian invasion of Ukraine and announced that the firm would no longer do business with any government entity in Russia. But he is not coming out. His move was insufficient for some inside and outside the company.
The most senior executive of the consultancy in Ukraine called on companies to move on and where possible, to close “offices and outlets” in Russia, where McKinsey has worked for nearly 30 years.
And Andrei Karamitru, whose LinkedIn profile says he was a senior partner at the firm for 16 years, brushed off McKinsey’s decision.
“Shame on you. You refuse to close the McKinsey office in Moscow,” Caramitru wrote in a LinkedIn post addressed to Sternfels. “Shut it down! now! It’s the money of blood, which is in your hands, that paints you every day that you keep it open.”
Others are under increasing pressure with sales and joint ventures in Russia. Daimler Truck Holding AG, one of the world’s largest commercial vehicle makers, said it would suspend its business activities in Russia until further notice and may review relations with local joint venture partner KAMAZ PJSC. Labor representatives said they “deem it appropriate” for the world’s largest truck maker to sell its shares in KAMAZ, the company’s works council said in an emailed statement.
Truck makers Volvo Cars AB and Volvo AB also announced they were halting sales and production in Russia. Harley-Davidson Inc. said in a statement that it has suspended its business in Russia, which together with the rest of Europe and the Middle East accounted for 31% of motorcycle sales last year. The Milwaukee, Wisconsin-based manufacturer doesn’t sell to Russia alone.
General Motors Co. said it was halting shipments to Russia citing “a number of external factors, including supply chain issues and other matters beyond the company’s control.” GM exports about 3,000 vehicles per year from the US to Russia.
Others who have said less are seeing their stock prices fall. French carmaker Renault SA fell as much as 12% on Monday on how sanctions would hurt its business in Russia, its second biggest market. Its unit AvtoVaz, where Renault holds a 68% stake, manufactures Lada-brand vehicles that account for about a fifth of the Russian market. Renault also manufactures the Captain, Duster and other vehicles at its plant in Moscow.
Ford Motor Company said it was not planning to exit its joint venture in Russia with Solars to produce commercial vans, at least for now. “Our current interest lies solely on the safety and well-being of the people in Ukraine and the surrounding region,” Ford said in a statement. “We will not speculate on commercial implications.”
Some companies are moving out of Ukraine, not Russia, saying they have concerns about security as the invasion progresses. Coca-Cola said it’s European bottling partner, the Coca-Cola Hellenic Bottling Company, is immediately ceasing operations in Ukraine. It did not answer questions about Russia.
Coca-Cola HBC said, “The safety of our people is our first priority and we have implemented our contingency plans which include halting production in Ukraine, closing our plant and asking allies in the country to stay home and follow local guidance.” Including to say.” spokesman said in a statement.
banned from football
In a move that will resonate well beyond the world football body, the business community fifa And the European authority UEFA banned Russian teams from the Games. “Football is in complete solidarity here and in full solidarity with all those affected in Ukraine,” it said in a joint statement.
Mark McNamee, director of Europe at advisory firm Frontier View, was talking to officials about the possible fallout of an invasion in Moscow two weeks ago. That said, many people shrugged off worst-case scenarios, meaning they weren’t necessarily responsible for what happened.
He added that given the SWIFT restrictions and capital controls, many corporations will find it difficult to support local operations. Firms in the energy or commodity sectors or those selling to the Russian government would face the potential risk of being perceived as “gaining from the war”.
Consumer goods companies with extensive operations and local production in Russia cannot easily exit, even if they want to, but face financial turmoil. Before the invasion last week, Danone SA, which runs Russia’s largest dairy business and has been operating in Ukraine for more than 20 years, said it was making additional plans to prepare for any military escalation.
Chief financial officer Juergen Esser said the company is looking to buy more local ingredients for its products from both markets, where the bulk of raw materials are already sourced domestically. Nestle also hedged its currency exposure, he said. Danone entered the Russian market three decades ago. The country accounts for about 5% of the company’s net sales, and Ukraine less than 1%.
Carlsberg A/S is the largest brewer in Russia through its ownership of Baltica Breweries. A Carlsberg spokesman said most of Baltica’s supply chain, production and customers are located in the country, which limits the direct impact of many of the restrictions. The company has limited exports and imports from Russia, where Carlsberg employs 8,400 people, but it is not currently possible to estimate the full extent of the direct or indirect consequences from the sanctions, she said. It employs 1,300 workers in Ukraine, where last week it halted operations at its breweries and sent workers home.
McNamee said foreign companies could face backlash from the Russian government, which could encourage boycotts or – in an extreme case – moves to confiscate assets.
“If you have iconic brands from Italy, Germany, the UK and the US, you are ready for retaliation by the Russian government,” he said.
The list of those cutting ties or reviewing their operations is growing by the hour as foreign governments lift sanctions against Russia, shut down airspace for its planes and give some banks SWIFT money. Messaging has been removed from the system. Some companies have concluded that both reputational and financial risks are too high to continue. Operations in Russia have become deeply problematic.
ruble It fell as much as 30% on Monday after the US banned transactions with the Russian central bank, hampering its ability to deploy its $630 billion foreign reserves to protect the currency.
For some companies, the decision to exit Russia is the conclusion of decades of lucrative, if sometimes full-blown, investments. Foreign energy majors have been pouring in money since the 1990s. Russia’s biggest foreign investor, BP Plc, led the way with its surprise announcement on Sunday that it would exit its 20% stake in state-controlled Rosneft, a move that could result in a $25 billion write-off And there could be cuts to its global oil and gas. a third of production.
The stake was the product of a protracted battle for control over TNK-BP, a joint venture between the oil giant and a group of billionaires in 2012. According to people familiar with the situation, it is now up to it to weigh whether to sell its stake back to Rosneft.
Shell plc followed on Monday. Citing Russia’s “stupid act of military aggression”, it said it was ending partnerships with state-controlled Gazprom, including its participation in the Sakhalin-II liquefied natural gas facility and the Nord Stream 2 pipeline project , which Germany blocked last week. The cost of both projects is around $3 billion. UK Business Secretary Quasi Quarteng met with Shell’s chief executive Ben van Burden on Monday to discuss the company’s involvement and welcomed the move.
“Shell has made the right call,” he tweeted. “There is now a strong moral imperative on British companies to isolate Russia. This offensive must have been a strategic failure for Putin.”
Equinor ASA, which is Norway’s largest energy company and a majority state-owned, also announced that it will begin withdrawing about $1.2 billion worth of assets from its joint ventures in Russia. “In the current situation, we consider our position to be unstable,” said CEO Anders Opedel. left the trick Exxon Mobil Corporation and total energy SE ranks as the only energy major in Russia with significant drilling operations.
Exxon oversees Sakhalin-1 along with Rosneft and companies in Japan and India, while Total Energy has a major stake in Russia’s largest independent gas producer Novatek PJSC. Total Energies CEO Patrick Payne said at a conference last Thursday that he did not see the impact of Russia’s aggression on the company’s operations because they are too far from the front. But the broader trend is in an exit direction, at least for now.
“I wouldn’t be surprised if you see more announcements about the exit,” said Alan Good, sector strategist for Morningstar. “Given the UK government there was additional pressure on BP, I am not sure that TotalEnergies will face the same pressure, as the relationship between France and Russia is different.”
When the Soviet Union fell apart, foreign companies saw enormous opportunities – a vast new market for minerals and oil with millions of consumers – and poured in to buy, sell and partner with Russian firms.
With Russia’s invasion of neighboring Ukraine, this trend has been shattered. Norway’s sovereign wealth fund, the largest in the world, said it was freezing about $2.8 billion in Russian assets and would come up with an exit plan by March 15.
Major law and accounting firms are also taking stock and potentially facing steep declines. Baker Mackenzie has so far been one of the few law firms to publicly state that it will break ties with several Russian clients to comply with sanctions. The Chicago-headquartered firm’s clients include Russia’s finance ministry and Russia’s second-largest bank VTB, which has been hit by asset freezes and sanctions by the US, UK and European Union. The law firm said on Monday it was reviewing its operations in Russia.
A Baker McKenzie spokesperson said, “We do not comment on the details of specific customer relationships, but this will mean exiting the relationship altogether in some cases.”
London-based Linkletters said in a statement that it is “reviewing all Russia-related actions of the firm.”
london firms
Some of London’s biggest law firms – including Allen & Overy and Clifford Chance – either failed to respond to questions about their handling of Russian clients or declined to comment. London’s courts have long been a battleground for wealthy Russians seeking to settle disputes over business deals and settle failed marriages. British judges promise a justice system that provides a fair trial even in case of disputes with doubtful money.
Other firms have come under fire for not getting out completely. Bob Sternfels, global managing partner at McKinsey & Company, took to LinkedIn on Sunday to condemn the Russian invasion of Ukraine and announced that the firm would no longer do business with any government entity in Russia. But he is not coming out. His move was insufficient for some inside and outside the company.
The most senior executive of the consultancy in Ukraine called on companies to move on and where possible, to close “offices and outlets” in Russia, where McKinsey has worked for nearly 30 years.
And Andrei Karamitru, whose LinkedIn profile says he was a senior partner at the firm for 16 years, brushed off McKinsey’s decision.
“Shame on you. You refuse to close the McKinsey office in Moscow,” Caramitru wrote in a LinkedIn post addressed to Sternfels. “Shut it down! now! It’s the money of blood, which is in your hands, that paints you every day that you keep it open.”
Others are under increasing pressure with sales and joint ventures in Russia. Daimler Truck Holding AG, one of the world’s largest commercial vehicle makers, said it would suspend its business activities in Russia until further notice and may review relations with local joint venture partner KAMAZ PJSC. Labor representatives said they “deem it appropriate” for the world’s largest truck maker to sell its shares in KAMAZ, the company’s works council said in an emailed statement.
Truck makers Volvo Cars AB and Volvo AB also announced they were halting sales and production in Russia. Harley-Davidson Inc. said in a statement that it has suspended its business in Russia, which together with the rest of Europe and the Middle East accounted for 31% of motorcycle sales last year. The Milwaukee, Wisconsin-based manufacturer doesn’t sell to Russia alone.
General Motors Co. said it was halting shipments to Russia citing “a number of external factors, including supply chain issues and other matters beyond the company’s control.” GM exports about 3,000 vehicles per year from the US to Russia.
Others who have said less are seeing their stock prices fall. French carmaker Renault SA fell as much as 12% on Monday on how sanctions would hurt its business in Russia, its second biggest market. Its unit AvtoVaz, where Renault holds a 68% stake, manufactures Lada-brand vehicles that account for about a fifth of the Russian market. Renault also manufactures the Captain, Duster and other vehicles at its plant in Moscow.
Ford Motor Company said it was not planning to exit its joint venture in Russia with Solars to produce commercial vans, at least for now. “Our current interest lies solely on the safety and well-being of the people in Ukraine and the surrounding region,” Ford said in a statement. “We will not speculate on commercial implications.”
Some companies are moving out of Ukraine, not Russia, saying they have concerns about security as the invasion progresses. Coca-Cola said it’s European bottling partner, the Coca-Cola Hellenic Bottling Company, is immediately ceasing operations in Ukraine. It did not answer questions about Russia.
Coca-Cola HBC said, “The safety of our people is our first priority and we have implemented our contingency plans which include halting production in Ukraine, closing our plant and asking allies in the country to stay home and follow local guidance.” Including to say.” spokesman said in a statement.
banned from football
In a move that will resonate well beyond the world football body, the business community fifa And the European authority UEFA banned Russian teams from the Games. “Football is in complete solidarity here and in full solidarity with all those affected in Ukraine,” it said in a joint statement.
Mark McNamee, director of Europe at advisory firm Frontier View, was talking to officials about the possible fallout of an invasion in Moscow two weeks ago. That said, many people shrugged off worst-case scenarios, meaning they weren’t necessarily responsible for what happened.
He added that given the SWIFT restrictions and capital controls, many corporations will find it difficult to support local operations. Firms in the energy or commodity sectors or those selling to the Russian government would face the potential risk of being perceived as “gaining from the war”.
Consumer goods companies with extensive operations and local production in Russia cannot easily exit, even if they want to, but face financial turmoil. Before the invasion last week, Danone SA, which runs Russia’s largest dairy business and has been operating in Ukraine for more than 20 years, said it was making additional plans to prepare for any military escalation.
Chief financial officer Juergen Esser said the company is looking to buy more local ingredients for its products from both markets, where the bulk of raw materials are already sourced domestically. Nestle also hedged its currency exposure, he said. Danone entered the Russian market three decades ago. The country accounts for about 5% of the company’s net sales, and Ukraine less than 1%.
Carlsberg A/S is the largest brewer in Russia through its ownership of Baltica Breweries. A Carlsberg spokesman said most of Baltica’s supply chain, production and customers are located in the country, which limits the direct impact of many of the restrictions. The company has limited exports and imports from Russia, where Carlsberg employs 8,400 people, but it is not currently possible to estimate the full extent of the direct or indirect consequences from the sanctions, she said. It employs 1,300 workers in Ukraine, where last week it halted operations at its breweries and sent workers home.
McNamee said foreign companies could face backlash from the Russian government, which could encourage boycotts or – in an extreme case – moves to confiscate assets.
“If you have iconic brands from Italy, Germany, the UK and the US, you are ready for retaliation by the Russian government,” he said.