British-based Lloyds Bank has withdrawn from the deal BP had to purchase Rosneft's crude oil. Lloyds was set to loan up to $2 billion to BP for the purchase.
Lloyds has allegedly walked over the political difficulties in Russia, specifically their difficult relationship with Ukraine and recent U.S. and EU imposed sanctions. A Lloyds banker said, "Lloyds' decision to leave the deal is because it does not want to embarrass the government, considering the current political situation with Russia. I think it was scared of going upstairs to ask permission." Lloyds is partially owned by the British government.
The other three banks that were part of the deal — Deutsche Bank, HSBC, and the Bank of China — are set to proceed with the plan. Though HSBC will go along with the BP loan, a senior banker there told IBTimes UK that the bank is "not looking to open new business in Russia, due to the lack of clarity over future sanctions." HSBC recently refused to offer a line of credit for Fiat's future ventures in Russia. Bank of America and the Royal Bank of Scotland also pulled away from Russia. They both refused a $1 billion loan to Russian gas production company Sibur.
While American and European banks aren't thrilled at the idea of doing business with Russia, China has happily created numerous business deals with the turmoil stricken nation. The biggest deal is between Gazprom and China National Petroleum Corp, a $400 billion natural gas deal with a thirty-year contract. Rosneft also took a $2 billion line of credit from the China Development Bank last year.
So, at least Russia has one friend.
This article is from the archive of our partner The Wire.