Russian invasion of Ukraine

Expert insights from ABN AMRO

This page offers market commentaries from ABN AMRO which will help you assess the possible impact of the Ukraine conflict.

Frequently Asked Questions Russia/Ukraine

Sanctions against Russia apply to some shares and bonds. For other investment products, trading has been affected or even halted by uncertainty about further sanctions. In addition, ABN AMRO also uses an exclusion list to prevent ABN AMRO from playing a role in financing  the governments of Russia and Belarus.
This concerns:
  • Russian and Belarusian government bonds
  • Shares and corporate bonds of certain Russian companies
  • Mutual funds and ETFs that invest in Russian investment products.
The sanctions are aimed at changing the activities and policies of Russia and Belarus. For the time being, the sanctions from the EU focus on the following:
  • Persons and entities in and around the Russian Government
  • Trade with persons and entities in the Donbas region (Luhansk and Dontesk)
  • Access of Russian financial institutions to the capital market
  • The reserves of the Russian central bank
  • Goods and technologies used in the energy sector, aviation and in support of the Russian military apparatus
 
The EU sanctions differ in a number of respects from the sanctions of the United Kingdom and the United States (OFAC). Like all other Dutch banks, we are following the publication of further sanctions by the EU, the United Kingdom and the United States (OFAC). As soon as these are known, they will be applied.
 
In addition to the sanctions, ABN AMRO has an exclusion list. For the time being, this list focuses on the following:
  • Russia and Belarus government bonds
  • Russian companies where engagement is not (or no longer) possible. These companies indicate that they no longer want to talk to us or to external asset managers
  • Companies with a Russian state interest
In the case of sanctions, it is forbidden to do any transactions. In the exclusion list, ABN AMRO excludes certain investments on the basis of our ESG (environmental, social, governance) standards. In asset management and investment advice, the excluded investment products are not (or no longer) included in the investment decisions. Existing clients are allowed to keep positions in Self Investing Basic and Self Investing Plus.
The investment products in our range for which the sanctions apply can no longer be found in the ABN AMRO app and Internet Banking. Do you have investment products in your portfolio that are subject to the sanctions?  Then you can no longer buy or sell them. The moment you want to sell them, you will get an error message: "This fund is not currently tradable ".
There are specific sanctions on stocks and bonds of certain Russian parties. This has been the case since the annexation of Crimea and these sanctions have recently been extended. As of 2 March, we have decided to stop Russian-related stock trading. That's because brokers and custodians have completely stopped trading with Russia and our network infrastructure is therefore affected.
Paying coupons and repaying loans has become more difficult. The markets are pricing in the heightened risk that Russia will no longer be able to pay its obligations. This means Russian bonds are low in price and high in yield. Most rating agencies have greatly downgraded the creditworthiness of Russia to non-investment grade (equivalent to junk bond). As a result, Russia is no longer eligible for most indexes and will drop out at the end of the month. A country that can no longer pay its debts and coupons is a defaulter and will therefore have to pay a higher fee (coupon) in the future for trading with others. We expect a similar effect for Belarus government bonds.
Some investment funds in our product range invest in Russian stocks. Because it is not possible to trade in Russian shares, it is also not possible to trade in these investment funds. The funds can no longer buy or sell these shares and can no longer issue a price.
Because many Russian investment products have been placed on the sanctions list, trading in those investment products is no longer possible. Therefore, the main market for these ETFs is now closed. Under limited circumstances trading houses still issue bid and ask prices for ETFs with Russian stocks or bonds. Because there is no or a limited market for the underlying shares or bonds, it can occur that there is a large difference between the issued bid and ask prices. Please pay attention to this development if you would like to place such an order.
We see that the index providers are now taking Russia out of the benchmark. Russian shares or bonds in, for example, Eastern Europe investment funds are valued at zero. Should there ever be trading in Russian investment products again, a value greater than zero can arise. This value benefits the investors who then own the participations in such an Eastern Europe fund.
Following the decision of the ABN AMRO Investment Committee, on Monday 21 and Tuesday 22 February we reduced the exposure to shares in particular in order to move from an overweight to a neutral equity position.
Before the beginning of the war we had a low exposure to:
  • Russian shares in ABN AMRO Profielfonds 2 to 6, from the mandates Sands Emerging Markets Equities and M&G Emerging Markets Equities.
  • Russian and Ukrainian bonds in ABN AMRO Profielfonds 1 to 5, from the mandates Barings Emerging Markets Bonds and Barings Global High Yield Bonds.
Since then, exposure to Russian equities has fallen sharply as the Sands Emerging Markets Equities mandate sold its 2 Russian stocks on February 25 and due to imbalance in the market. On 9 March, exposure was close to 0%.
Our exposure to Russian and Ukrainian bonds was around 0.1% on 9 March, reflecting the imbalance in the market.
Through ABN AMRO, a client cannot invest in shares or bonds of companies that engage in controversial weapons and/or cluster munitions.
 
For all our forms of investment, controversial weapons are excluded (except in the case of external investment funds). This is the case if the company is involved in the production, sale and/or distribution of (parts of) controversial weapons and this involvement relates to the main weapon system or to parts/services of the main weapon system that are custom-made and that are essential for a lethal use of the weapon.
 
The following weapons are controversial:
  • Cluster weapons (based on Dutch legislation and the United Nations Convention on Cluster Munitions, 5% threshold for external investment funds)
  • Nuclear weapons (except for production for the United States, the United Kingdom and France)
  • Anti-personnel mines
  • Biological weapons
  • Chemical weapons
  • White Phosphorus weapons
 
If the company is indirectly involved in controversial weapons through ownership, it is excluded if the percentage of ownership exceeds 10% for ESG funds and sustainable funds and more than 35% for other funds.
 
For our Impact Mandate, Sustainable Funds Mandate and the Sustainable Investment Mandate, we exclude all military contracts and activities for the production and sale of firearms (except for external investment funds). No distinction is made between weapons of destruction and defence.
Information for clients who invest via Self Investing Basic or Self Investing Plus:
 
For Guided Investing clients: in this article you will receive an explanation from Judith Sanders, investment strategist at ABN AMRO.

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