The manager of Norway’s sovereign wealth fund has written to the country’s government saying it has now excised Russia from the fund’s benchmark index and will sell all its Russian assets – now deemed worthless – though it cannot start doing that yet.

At the beginning of March, the Norwegian government gave Norges Bank Investment Management (NBIM) until today to come up with an action plan for divesting all of the NOK11.3trn (€1.1trn) Government Pension Fund Global’s (GPFG) Russian assets.

Today, NBIM published a letter to the Ministry of Finance on the topic, signed by Ida Wolden Bache, deputy governor of Norway’s central bank Norges Bank and Nicolai Tangen, chief executive officer of Norges Bank Investment Management (NBIM) – the central bank department that runs the SWF.

As previously revealed, Norges Bank said the fund’s Russian equities were worth around NOK27bn at end of 2021. At a press conference on 3 March, NBIM’s leaders said those investments were then estimated to be worth only around NOK2.5bn.

In today’s letter, Norges Bank told the ministry that the Moscow stock exchange had been closed since 28 February 2022, and extensive sanctions had been imposed.

“Since it is not possible to carry out transactions in the Russian stock market, Russia was removed from all of FTSE Russell’s indices at a price approximately equal to zero from 7 March 2022.

“Russia was also excluded from the fund’s benchmark index from the same date,” Wolden Bache and Tangen said.

Norges Bank said it would sell all the fund’s investments in Russia in line with the ministry’s decision, but that owing to closed markets and extensive sanctions, it was not possible to commence the sale at present.

“Norges Bank will return to the Ministry with a recommendation on the lifting of the freeze on our investments in Russia once markets are functioning more normally,” the pair said.

At that point, they said, they would make more detailed recommendations on the implementation of the sale “based on applicable sanctions and the fund’s interests more generally”, and that divestment would have to take place over time.

“The situation is very uncertain,” they wrote.

An enclosure is being sent along with the letter, according to Norges Bank, which includes more details and proposals for specific adjustments to the management mandate to reflect the removal of Russia from the fund’s investment universe.

However, the text of the enclosure has not been published.

The equity-heavy GPFG has lost around 8.5% of its value since the end of 2021 according to the current value stated on NBIM’s website. Stock markets around the world have tumbled in the early months of this year, first on inflation and economic growth fears and then in reaction to the unexpected war in Ukraine.

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