Norwegian Central Bank Advocates for Sovereign Fund to Liquidate Russian Assets
December 4, 2024, 2:58 pm

Norwegian Central Bank Advocates for Sovereign Fund to Liquidate Russian Assets

البنك المركزي النرويجي

The Norwegian central bank stated that the Norwegian government should allow its massive sovereign wealth fund to sell stakes in its Russian portfolio when possible, ending a freeze that has been in place since 2022 which prevented the liquidation of investments.

The Norwegian Ministry of Finance ordered the suspension of all transactions involving Russian assets held by the fund, managed by the central bank, shortly after the outbreak of the Russian-Ukrainian war in February 2022, stating at that time that the ultimate goal was to liquidate its investments.

The Norwegian sovereign wealth fund is valued at $1.8 trillion, making it the largest sovereign wealth fund in the world, owning 1.5 percent of the shares of publicly listed companies globally.

The fund is still effectively prohibited from exiting Russian assets because it is not allowed to sell them to counterparties from funds subject to U.S. or EU sanctions.

While this means it is impossible to create a general exit strategy, the fund should now be permitted to sell its assets in Russia if opportunities arise, according to the central bank in a letter to the Ministry of Finance dated August 25, published today, Wednesday.

The bank stated in the letter, "Sanctions against Russia and countermeasures by the Russian authorities have escalated further in 2024," adding that "the opportunities to sell Russian bonds are currently very limited."

Moscow regards sanctions from the U.S. and the EU as a form of economic warfare and claims that calls for divesting from Russian assets are hostile acts by unfriendly nations.

Philip Gabuniya, deputy governor of the Central Bank of Russia, told Reuters that any decision to sell assets within Russia requires permission from Moscow, which is only granted for "compelling reasons."

The Norwegian fund's holdings in Russia were estimated at around $3 billion at the end of 2021, but their value has sharply declined following the depreciation of Russian assets worldwide since the onset of the war in Ukraine.

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