Ukraine-Russia conflict: Scottish university urged to drop 'untenable' £1m+ stake in sanctioned Russian bank

One of Scotland’s leading universities holds more than £1 million in shares in a major Russian state-owned bank that has been targeted by sweeping UK and US sanctions.

Thursday, 3rd March 2022, 2:19 pm

The University of Edinburgh, which is a signatory to a United Nations code on responsible investment, has a significant shareholding in Sberbank, which holds around a third of all Russia’s bank assets.

Amid the escalating crisis in Ukraine, the lender has been at the centre of a growing political row in Scotland over the past week, given the fact the pension fund for MSPs has holdings in the company worth close to £300,000.

However, the university’s investment in the firm is almost four times that amount, prompting calls for the institution to immediately jettison its stake.

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Michael Marra, Scottish Labour’s shadow cabinet secretary for education and skills, described the university’s position as “untenable”. He has also written to every university principal in Scotland urging them to scrutinise their investments and relationships with Russian interests, and ensure disinvestment is “complete and immediate”.

With a growing exodus of investors in Russian firms, Liz Truss, the foreign secretary, has announced Sberbank is to be hit by a new package of UK sanctions, which will ban it from clearing payments in Sterling.

The US Treasury, which described the bank as “uniquely important to the Russian economy”, has also blocked its ability to process transactions in US dollars.

Edinburgh University students staged a protest on Thursday morning in support of Ukraine. Picture: Lisa Ferguson Edinburgh Universty Polish Society organise a protest in Bristo Square this morning in support of Ukraine 'Stand with Ukrine'

Only today, the university’s students organised a support in Bristo Square in support of Ukraine. Last week, the university said it was “deeply troubled” by events in Ukraine, and had taken steps to suspend all its exchange programmes in Russia.

In a statement issued to staff and students, the university added: “The invasion of Ukraine by Russia has prompted heightened scrutiny of UK-Russia collaboration links.

“In view of recent events and the sanctions that the UK has implemented against the Russian state, we are reviewing our collaborations to take account of any potential security risks.”

However, a breakdown of the university’s endowment and investment fund, worth more than £735m as of January, shows it has more than £1.1m in Sberbank stock, held via the Edinburgh-headquartered fund managers Baillie Gifford.

The valuation is accurate as of January this year, but it is likely to have plummeted in light of the spate of sanctions issued against Russian interests.

Records show the university has held the Sberbank stock since at least January 2016. By that point, it had already been subject to numerous US and EU sanctions after Russia’s annexation of the Crimean peninsula.

A spokeswoman for the university said: “We are reviewing the implications for our endowment portfolio, a small proportion of which includes indirect investments in Russian-related assets.

“Where these are held in pooled funds, we are engaging with fund managers as part of our review.”

In a statement, Baillie Gifford described Russia’s invasion of Ukraine as a ”tragedy” with a “devastating” human cost.

It added: “We have reduced our clients’ holdings in Russian companies. Due to sanctions, the market is effectively frozen for some Russian equities, making it harder to sell them, but we are decreasing our exposure as market conditions allow. Baillie Gifford will continue to monitor the situation and comply with international sanctions.”

Asked by The Scotsman if the Sberbank holding was frozen, and if Baillie Gifford intended to fully divest it as and when the situation allowed, the company declined to comment.

Mr Marra said: “Scotland’s response to the unprovoked and brutal invasion of Ukraine must be unequivocal and immediate. Strangling the Russian economy can only be effective if financiers have no place to turn and funds have no place to be hidden.

“Our Scottish universities know that they have a duty to the public good. This is not a time for equivocation or delay. It is not a time for fund managers to await a good price elsewhere for the relocation of investments. Stakes in Russian funds and banks must be dropped immediately.”

He added: “There may well be losses faced but these are nothing compared to the losses faced by the citizens of Ukraine or the broader threat to life that Putin poses. The response from the University of Edinburgh shows that they know the position is untenable. They cannot hide behind fund managers. They must instruct immediate action.”

Alex Cole-Hamilton, leader of the Scottish Liberal Democrats and the MSP for Edinburgh Western, said: "It's time for Edinburgh University to pull out of its Sberbank investment and its other Russian holdings.

"Scotland needs to play its part in a putting the squeeze on [Russian president] Vladimir Putin and his regime and that means using the financial leverage we have.

"It is important to send a message that Putin's behaviour in Ukraine will not be tolerated or supported.”

The Sberbank holding sits ill at ease with the university’s commitment to use its funds to “support environmentally and socially positive activities”.

Its responsible investment policy statement specifies that it “aims to be a truly global university benefiting society”.

It adds: “The university’s commitment to responsible investment is tangible and underpins our stated values and our mission.

“The university considers the potential impact of decisions on all of its activities and seeks to understand the consequences of implementing its choices.”

It comes as Labour’s Pauline McNeill, chair of the Scottish Parliamentary Pension Fund (SPPF), has written to Baillie Gifford, asking it to disinvest its holding from Sberbank, which was first revealed by investigative news site The Ferret.

In her letter, Ms McNeill wrote: “I recognise entirely the SPPS is one of many investors in the Managed Pension Fund, and as a pooled fund, we, the trustees, cannot direct individual investments. I am nevertheless writing to you in the strongest possible terms to request that Baillie Gifford divest immediately from Sberbank and all other Russian companies.”

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