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The European Bank for Reconstruction and Development (EBRD) said on Wednesday that it won't make any new investments in Russia in response to sanctions on the country announced by the European Union last week.
The sanctions were announced on July 16, with EU leaders instructing the European Investment Bank to suspend new loans to Russia. Unlike the EIB, however, the EBRD isn't entirely owned by the bloc's members. Other shareholders include the U.S., Japan, Canada and Russia itself.The statement said:
A majority of the Board of Directors of the European Bank for Reconstruction and Development (EBRD), including all EU member states and several non-EU shareholders, have given clear guidance to the EBRD management that, for the time being, they will be unable to approve new investment projects in the Russian Federation.Their guidance follows a declaration by last week's European Council which called on the EU member states to coordinate their positions within the Bank's Board. The EBRD management will be guided by this in its operational approach in Russia. The Board of Directors represents the Bank's shareholders (64 member states, as well as the European Union and the European Investment Bank).The Bank will continue to manage its portfolio of existing projects and client relationships in Russia. The Bank will also continue to maintain its physical presence there. In the first six months of 2014, 19 per cent of the Bank's investments were in Russia, with 81 per cent made in the EBRD's other 34 countries of operations. During the first half of 2014, the Bank invested a record amount of €3.6 billion in its countries of operations, with a high transition impact and continued strong profitability.
The EBRD's move marks the first time it has stopped making any new investments in a country of operation.
As of the end of March, the EBRD's portfolio of investments in Russia stood at €8.7 billion. Some 43% of its investments are in industry, commerce and agribusiness, with another 23% in the financial sector, 16% in energy, and 18% in infrastructure.