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Veon moves loans from sanctioned banks to Russian unit

Serkan Okandan Veon CFO.jpg

Telecoms operator Veon has moved loans from sanctioned banks worth more than US$1.12 billion from its head office in Amsterdam to its Russian branch, out of reach of Western authorities.

The loans, worth a total of 90 billion roubles, are from Sberbank and Alfa Bank, both Russian banks that are sanctioned by the European Union, the UK and the US.

The original borrower was Veon Finance Ireland and the guarantor was Dutch-registered Veon Holdings BV – both registered in the EU.

Veon CFO Serkan Okandan (pictured) has now moved the loans from the EU to its Russian operating subsidiary, VimpelCom, which operates under the Beeline brand.

This process is called novation, valid only with the approval of all parties, which means in this case the parent company, Veon Holdings, Veon Finance Ireland, VimpelCom in Russia and the two banks.

It puts the loans out of the reach of the EU, where the group is registered, the US – where Veon’s shares are still quoted on Nasdaq – or the UK, where Veon said earlier this year it was planning to move its head office.

Okandan did not refer to Russia’s attack on Ukraine, the reason for Sberbank and Alfa Bank being sanctioned. He said: “The novation of the rouble loans more closely aligns rouble liabilities with rouble revenues and reduces HQ external debt.”

Veon has a close relationship with both banks. Alfa Bank is controlled by sanctioned oligarch Mikhail Fridman, former chairman and still biggest shareholder in Veon – via investment company LetterOne, which owns 47.9%. It and Sberbank are both sanctioned following Russia’s attack on Ukraine in February.

Two years ago, Capacity reported that the new CEO of Beeline Russia, Alexander Torbakhov, was the former deputy chairman of Sberbank, where he was deputy chairman and also managed retail banking operations. VimpelCom in Russia provided 52% of Veon’s income, according to results out in February.

After Russia’s invasion, Fridman told LetterOne staff that he opposed the war.

Veon’s share price has dropped from $1.54 in mid-February, before Russia’s attack, to $0.56 now. The company plans its first-quarter earnings call a week today, 28 April.