Norwegian bank loses 300 million in Murmansk, Russia
Murmansk was seen as an up-and-coming market for banks in Norway. Now they all flee the region with multi-million losses.
The Sparebank-1 Northern Norway (SNN) now confirms that it files a loss of 300 millon NOK (€35 million) from its investments in Murmansk and St. Petersburg.
The loss comes as a consequence of the crisis in Russian economy and the subsequent challenges in the Russian banking sector, the bank says in a press release. SNS owns 10 percent of the Tavrichesky Bank and 75 percent of the Northwest Alliance. Losses could get worse. The company forsees possible total losses of up to 615 million NOK.
The Russian banking sector is currently experiencing a serious crisis, and a big number of banks are going bust.
DNB, the biggest bank in Norway, already in 2014 pulled out of Murmansk, where it for a number of years had been a key owner of the Monchebank. Also SNN has been trying to exit the Russian market, so far unsuccessfully.
“When the Norwegian banks started to engage in Murmansk, there were great hopes for the development of the Shtokman gas field and for expanded Norwegian-Russian cooperation”, Claus Bergersen, business adviser in the Norwegian Barents Secretariat says. However, today the Shtokman field has been abandoned and large-scale cross-border business cooperation has failed to materialize.
“Today, there is simply no need for Norwegian banks in Murmansk”, Bergersen says. He was himself instrumental in the establishment of theSNN in Murmansk in 2007. Then working as head of the regional SNNrepresentation office, Bergersen took part in the opening of the Northwest Alliance together with the Russian Tavrichesky Bank.
Contrary to the recommendations of the representation office, the Northwest Alliance decided to establish its headquarters in Sankt Petersburg, and only a satellite in Murmansk.
According to Bergersen, this move raised the risks and might be one reason for the failed investments. “The Northwest Alliance should have concentrated only on Murmansk”, he argues.
Related stories from around the North:
Canada: Will Russia’s actions in Ukraine affect relations in the Arctic Council?, Eye on the Arctic
Finland: Rouble collapse hits Finland, Forex stops buying Russian currency, Yle News
Greenland: Arctic oil and gas must stay in ground to restrict warming to 2°C says study, Blog by Mia Bennett, Cryopolitics
Iceland: From Arctic Circle 2013-2014, a big drop in the price of oil, Blog by Mia Bennett
Norway: Currency drama has little impact on tourism in Barents region, Barents Observer
Russia: Russian crisis money for Novatek’s Yamal LNG project, Barents Observer
Sweden: Falling oil prices benefit Sweden, Radio Sweden
United States: World oil price decline siphons billions of dollars expected by Alaska, Alaska Dispatch News
