US banks freeze accounts of Switzerland’s Sulzer after Russia sanctions

US banks freeze accounts of Switzerland's Sulzer after Russia sanctions
Sulzer on Wednesday saw its share price fall 8.54 percent to 97.40 Swiss francs. Photo: Sulzer
Swiss engineering company Sulzer said on Wednesday that its bank accounts in the United States had been partially frozen after one of its top shareholders was targeted by US sanctions.

Spokesman Rainer Weihofen told AFP that banks, not the US authorities, had ordered the partial freeze.

“The bank accounts have not been frozen by the authorities but by the banks. There is no order from the Treasury,” he said.

See related story: Switzerland's Sulzer steps away from Russia's sanctions-hit Renova

The move by the banks comes despite moves by Sulzer, which specialises in industrial pumping systems, to limit the influence of one of its top investors, Russia's Renova, which has been targeted by US sanctions.

Weihofen also highlighted the partial nature of the freeze.

“The good news is that we can still pay the salaries and our suppliers and all contracts made before Friday can be executed,” he said.

But he acknowledged that there was bad news: “We are not allowed to make new contracts or do any transactions in US-dollars beyond the allowed ones.”

Sulzer said Monday it was buying back five million of its shares from Renova to guard against “disruptions” after Washington slapped both the Russian company and its billionaire chairman Viktor Vekselberg with sanctions.

The purchase, expected to be finalised this week, will reduce Renova's stake in Sulzer to below 50 percent, the company said in a statement.

In practice, Sulzer's factories in the United States can continue to run for as long as the company is able to pay its employees and suppliers.

They will meanwhile only be permitted to complete orders logged up until last Friday.

And the partial freeze risks impacting the company's activities not only in the United States but also in other markets, since a large portion of its international transactions is conducted in US dollars and runs through its US accounts.

Sulzer on Wednesday saw its share price fall 8.54 percent to 97.40 Swiss francs, after plunging nearly 16 percent on Monday.

Washington unveiled the sanctions targeting Russian President Vladimir Putin's inner circle last Friday.

President Donald Trump's administration has said the measures were aimed at punishing Russia for a range of actions, including election interference and support of the Syrian government.

The measures targeted seven oligarchs, 12 companies they own or control, 17 senior Russian officials and the state-owned arms export company Rosoboronexport.