(Bloomberg) -- Barclays Plc has stepped in to support a UK charity set up by Russia’s richest sanctioned billionaire after JPMorgan Chase & Co. severed ties with the fund last year.
The British lender is now listed as a provider of banking services for the London-based branch of Vladimir Potanin’s namesake foundation, according to filings. Goldman Sachs Group Inc. has also been offering banking and investment advisory services to the Potanin Foundation, which had about $117 million in total funds at the end of last year, the filings show.
Barclays received authorization from the UK’s sanctions watchdog to provide banking services to Guy Hollander, who works at the accounting firm Mazars LLP and was appointed by the UK’s charity regulator to be the Potanin Foundation’s independent interim manager.
“HM Treasury’s sanctions office granted license for Mr. Hollander to open an account to manage assets of the charity and Barclays opened the account for Mr. Hollander as the interim manager in accordance with this license,” a Barclays spokesperson said in an emailed statement. “The bank did not have a banking relationship with the charity prior to the appointment of Mr. Hollander.”
Barclays’s move comes more than a year after JPMorgan terminated its relationship with the Potanin Foundation. The bank liquidated the investment portfolio it managed for the charity and paid over the proceeds to the independent manager of the foundation. JPMorgan declined to comment.
The back-and-forth puts on display the tightrope banks must walk when dealing with sanctions compliance. Banks that run afoul of these rules can face steep penalties, so they often adopt extreme caution toward anyone who could be considered a sanctions risk. But a growing number of governments around the world have begun to warn banks against overcomplying and cutting off legitimate customers from services because of those fears.
Potanin, 62, has amassed a roughly $29.9 billion fortune after founding MMC Norilsk Nickel PJSC, the world’s largest producer of high-grade nickel, according to the Bloomberg Billionaires Index. He has provided $100 million to fund the UK foundation bearing his name since its inception almost two decades ago, filings show.
The foundation works in tandem with the Russian billionaire’s Moscow-based charity, which is the main vehicle for his philanthropy. It has investments in equities, hedge funds and fixed income.
Representatives for Potanin and his Russia foundation didn’t respond to a request for comment.
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Potanin has taken advantage of restrictions on foreign ownership of Russian assets since his country invaded Ukraine: He branched out into finance and bought stakes in banks as foreign owners were forced to pull out. The billionaire was sanctioned by the UK two months after he agreed in April 2022 to buy a stake in Rosbank PJSC. He was placed on the US blacklist at the end of last year.
Some professional service providers had stepped back from the Potanin Foundation before the UK sanctioned its founder, according to the charity’s recently filed 2022 accounts. Goldman Sachs, which has been an investment adviser for the charity for about a decade, chose to stay in place after receiving assurances from Hollander and the provisions of the charity’s operating license, the filings show.
“Goldman Sachs were willing to continue to hold the investments but it was only in October 2022 that they were willing to continue,” the Potanin Foundation said in its accounts. “The interim manager engages with Goldman Sachs on a regular basis.”
A Goldman Sachs spokesperson said the firm confirmed its relationship with the foundation complies with applicable sanctions, adding that the charity operates in line with a license from the UK’s Office of Financial Sanctions Implementation. Hollander did not respond to a request for comment.
The foundation itself is no longer subject to UK sanctions after the Charity Commission suspended Potanin’s powers in July 2022 to oversee the foundation’s trustees as it opened an investigation into the charity. The Russian billionaire has sought to challenge the actions against the fund, which hasn’t released any funds since the Ukraine conflict began.
A representative for the Charity Commission declined to comment because its investigation into the Potanin Foundation is ongoing.
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