Sanctions imposed on Russia over Ukraine could have a significant financial impact on London. As Ivor Bennett reports the City has become a hub for Russian companies doing business around the globe.
REPORTER: Welcome to Londongrad - the little piece of Russia in the heart of the British capital. The West End is where they live, the City is where they play. IPOs, M and As, London has become the go-to place for Russian businesses looking to make it big in the global financial system. But the threat of increased sanctions may change that. While the street signs will stay, the companies may not. The sanctions so far have left businesses unscathed, but it's created a climate of uncertainty that could see London losing out. Two Russian IPOs have already been postponed - the crisis in Crimea denting appetite for Russian stocks. Sergei Ostrovsky is Partner at London law firm Ashurst.
SERGEI OSTROVSKY, PARTNER, ASHURST LLP: "Right now, I think, in the short term, there will be a period of caution while people put on hold projects which can be put on hold, adopt the wait and see position. and in the long term, it is difficult to see for an easy replacement for the city of London where Russian business is concerned."
REPORTER: Nearly 70 Russian companies are listed on London markets, including the likes of energy giants Rosneft and Gazprom. Most have floated in the last ten years, with IPOs totalling over 50 billion dollars. The most recent was hypermarket chain Lenta - raising nearly a billion at the end of last month. But according NAB's Tom Vosa, it may not be a bad thing if the business dries up.
TOM VOSA, HEAD OF MARKET ECONOMICS, EUROPE, NATIONAL AUSTRALIA BANK: "The quality of some of the Russian floats on the London stock market may have done perhaps more good - more harm than good in the first place due to governance issues. Clearly in terms of fees for lawyers and accountants and indeed sponsoring banks they might be a bit lower, but perhaps London might need to look at cleaning its act up. and perhaps avoiding some of this business would not be a bad thing."
REPORTER: But for much of the City it's quantity that matters. And with many of the companies closely tied to the Russian state, any increase in sanctions is sure to be felt. A scenario that still hasn't been ruled out.
1. To put something on hold means to postpone it. • They put the project on hold until they got enough money to finish it.
2. To clean up one's act means to stop doing things that other people do not approve of and start to behave in a more acceptable way. • There's a very strong anti-press feeling at the moment. A lot of people think it's time they cleaned up their act.
3. To rule something out means to stop considering something as a possibility. • Let's see how much the trip will cost before we rule it out.