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Fair Finance Sweden: Swedish savings support Putin's war machine

Wednesday, March 2, 2022

Swedish banks and pension funds are investing close to SEK 9 billion in the Russian state and Russian state-controlled companies, despite the fact that the companies have been on the EU sanctions list since 2014. The investments also go to Russian state-controlled media, Fair Finance Sweden's new review shows.

UPDATE March 10: Nordea, Handelsbanken, Länsförsäkringar, Danske Bank, SPP, Öhman, AP7, SEB and Swedbank have now promised to sell their investments.

The Russian war machine costs huge sums and in 2021 alone, Russia invested SEK 560 billion in the military. The money comes, among other things, from companies controlled by the Russian state, especially in the energy and banking sector. Since 2014, ten of the companies are on the EU's sanctions list in response to Russia's invasion of the Crimean peninsula the same year. The sanctions mean that it is forbidden to provide the companies with long-term financing. However, investing in companies is not prohibited.

Fair Finance Sweden's review now shows that Swedish banks and pension funds have large investments in six of these companies. During the second half of 2021, Swedish investments in companies amounted to SEK 8.5 billion. Nordea and Swedbank have the largest investments. Nordea and Handelsbanken are the only ones investing in Russian government bonds - a kind of loan to the Russian government - to a total of SEK 700 million.

"It is a scandal that Swedish banks and pension funds continue to support sanctioned companies and a regime that so clearly violates international law. I think many Swedish bank customers and pension savers will be very upset about this", says Jakob König at Fair Finance Sweden.

Investments in state-controlled media

One of the largest Swedish investments is in the Russian state-controlled energy company Gazprom, which also owns the largest media company in Russia with 38 TV channels and 10 radio stations. Russian state-controlled media are heavily criticized for being an extended propaganda channel for the Kremlin. Gazprom recently took over Russia's largest social media channel VKontakte and as the new CEO, the son was named one of Putin's closest associates. Nordea , Carnegie, East Capital and Danske Bank are investing a total of SEK 1.7 billion in Gazprom.

Provides large revenues to the Russian regime

The largest Swedish investments are in Russia's largest bank, Sberbank, which is also often described as the Kremlin's housing bank and which has been on both the EU's and US sanction lists for many years. The Seventh AP Fund, which manages pensions for more than five million Swedes, is investing several hundred million kronor in Sberbank, as well as another state-controlled bank, VTB. In total, the two banks made SEK 180 billion in profit in 2021, of which most of the money goes to the main owner, the Russian state. Gazprom is also a money machine for the Kremlin. Last year, the company made a record profit and distributed more than SEK 128 billion to its owners, of which more than half to the Russian state.

"There is a lot of debate about how development aid is used, but when it comes to the private financial sector, there is still a lack of requirements for transparency and responsibility. It is obvious that self-regulation does not work and the regulations need to be tightened", says Penny Davies who is a Senior Policy Adviser at Diakonia.

Sanctioned companies also in sustainability funds

At Nordea, Handelsbanken, SPP and Öhman, Russian companies and Russian government bonds were also found in their sustainability funds. Most were found at Nordea, where seven sustainability funds invest several hundred million kronor in Russian government bonds and Sberbank. Most of the funds are also classified as light green according to the EU's new regulations, 36 out of a total of 50. At Handelsbanken and SPP , dark green funds have also invested in the companies. A Nordic Ecolabelled fund at Handelsbanken also invests in Sberbank. See the full list of funds here .

None of the companies or Russian government bonds were found at Alecta, AMF, Folksam, Första till Fjärde AP-fonden and Skandia. On Sunday, the Norwegian state oil fund announced that it will sell all its investments in Russia. 

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