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. Last Updated: 07/27/2016

HSBC Backs Out of $500M Norilsk Credit

LONDON -- HSBC has pulled out of an unsecured $500 million syndicated loan for metals giant Norilsk Nickel ahead of signing the mandate to arrange the facility, banking sources told Loan Pricing Corporation, Reuters' syndicated loan unit, on Friday.

Barclays and BNP Paribas were set to share the mandate with HSBC and are expected stay in place although the structure of the loan and possibly the size may be altered, the sources added.

HSBC cited the Russian government's campaign against Yukos as being the main reason to pull out.

Banking sources said there are general fears over the lending climate in Russia, which has fallen under the shadow of the potential bankruptcy of the oil major.

"It's a volatile market, and some banks will get cold feet about Russia because of the political climate," a banker said.

Norilsk Nickel, like Yukos, is owned by an 'oligarch,' Vladimir Potanin, a member of a business group that formed around former president Boris Yeltsin. Banks are waiting to see if the state's attack on Yukos is an isolated incident, and not a wider campaign against powerful tycoons.

HSBC's decision comes after Societe Generale and ING pulled out of group of banks arranging a $600 million loan to Anglo-Russian oil company TNK-BP, citing poor market conditions.

Norilsk is seeking the funds to repay short-term loan it got in April to buy a 20 percent stake in South African miner Gold Fields.

(Bloomberg, Reuters)