FirstFT: Russia moves to seize ‘naughty’ western companies and block exits

Our top scoop today is on a confidential Kremlin decree that will give Russia powers to seize assets of “naughty” western companies and make it harder for them to exit the country.

The Kremlin last week secretly ordered legislation to enable western assets to be appropriated at knockdown prices and is discussing even more draconian measures to fully nationalise groups, according to people familiar with the deliberations.

The insiders said Vladimir Putin’s economic team wanted the threat of nationalisation to be part of a carrot-and-stick approach aimed at punishing western countries that seize Russian assets while rewarding those that play by the Kremlin’s rules.

The decree, seen by the Financial Times, would give the Russian state priority rights to buy any western asset for sale at a “significant discount” so they could be sold at a profit.

Putin’s order to his cabinet, signed last week, also requires all private Russian buyers of western assets to be fully Russian-held or in a process to exclude all foreign shareholders, further complicating any exit procedure.

Here’s what else I’m keeping tabs on today:

Five more top stories

1. Exclusive: US private equity firm TA Associates has raised $16.5bn for its latest flagship vehicle, a record size for the Boston-based group which bucks industry-wide fundraising challenges as higher interest rates and falling public valuations cause investors to retrench.

2. Citigroup is set to have cut 5,000 jobs by the end of this month, mostly in investment banking and trading, after a prolonged slump in dealmaking. Severance costs related to 1,600 of the dismissals would crimp second-quarter earnings, its chief financial officer has warned. Read more from the bank’s investor conference yesterday.

3. Exclusive: Hong Kong is pressuring HSBC and Standard Chartered to take on crypto exchanges as clients. The city’s banking regulator told the UK-based institutions and Bank of China that due diligence on potential customers should not “create undue burden”. Read the full story.

4. Exclusive: The EU has agreed a trade deal with Kenya, its first with an African nation since 2016. The accord will give Kenya duty- and quota-free access to the bloc’s market for all its exports, while Kenya will gradually open its market to more EU imports. Here’s why the deal is crucial for both sides.

5. MPs have demanded that the UK Financial Conduct Authority explain its misconduct probe against Crispin Odey, asking the regulator to detail the “nature and intensity of their supervision and engagement” with the hedge fund manager’s firm. Read more from the Treasury select committee’s letter to the watchdog.

The Big Read

At first glance, the US stock market seems to have defied pessimists. The S&P 500 has risen more than 14 per cent this year, and with two weeks still to go, this is already one of the best half-years for the index in two decades. But this is a rally standing on top of some very slender stilts. Strip out just a tiny clutch of tech companies, and the index is going nowhere.

We’re also reading and listening to . . . 

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Chart of the day

HSBC is raising mortgage rates for the second time in a week, a move expected to be copied by other lenders that will ramp up financial pressure on UK households — and political danger for Prime Minister Rishi Sunak. Fears among Tory MPs about a “mortgage time bomb” contributed to the ousting of his predecessor Liz Truss after her “mini” Budget spooked markets and pushed up interest rates.

Take a break from the news

Cormac McCarthy, the Pulitzer-winning author of The Road (2006), died on Tuesday at the age of 89. McCarthy, who combined the declarative directness of Ernest Hemingway with the baroque inflections of William Faulkner, was the last conjurer of a now vanished America, writes Christian Lorentzen.

Additional contributions by Benjamin Wilhelm and Gordon Smith