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Norway finance ministry ordered divestments after Ukraine

war

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Fund unable to sell so far due sanctions

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Russia has said its permission is needed

(Adds Russian position in paragraphs 7-10, detail on fund's

Russian holdings in paragraphs 12-16, bullet points)

By Gwladys Fouche

OSLO, Dec 6 (Reuters) - Norway's $1.8 trillion sovereign

wealth fund, the world's largest, can start selling stocks it

holds in Russian companies, as long as it complies with

international sanctions, the deputy finance minister told

Reuters on Friday.

"Permission to sell the fund's Russian stocks is given on

the condition that the sale can be done in line with applicable

sanctions," Ellen Reitan said in an email.

The Norwegian finance ministry ordered a halt to all

transactions in the fund's Russian assets shortly after Moscow's

invasion of Ukraine in February 2022 and said at the time that

the ultimate goal was to divest its holdings.

The fund has so far been unable from offloading Russian

assets because it is not permitted to sell to counterparties

under U.S. or EU sanctions.

On Wednesday, the central bank, which manages the fund,

asked the Norwegian finance ministry for permission to sell

parts of its Russian portfolio when possible, saying "isolated

transactions if and when divestment opportunities arise is

currently the only way" to sell off parts of the portfolio.

Wednesday's letter did not say if the fund had found

buyers it could sell to.

Norway's fund, which holds the windfall generated by its oil

and gas production, owns 1.5% of all global listed shares in

companies.

Moscow considers U.S. and EU sanctions a form of economic

warfare, and says calls to divest Russian assets are hostile

acts of unfriendly states.

Philip Gabunia, deputy governor of Russia's central bank,

told Reuters on Wednesday any decision to sell the assets inside

Russia would require Moscow's permission, granted only with

"compelling grounds".

"If they want to sell in Russia, they must submit a request

to our Russian governmental commission. Only after that will the

matter be considered. Outside of Russia, they can sell to

another foreigner, but it will also remain frozen," Gabunia

said.

Asked about Gabunia's comment, the Norwegian deputy finance

minister did not address the question in her emailed reply.

The value of the fund's Russian equity portfolio was

estimated at just 1.5 billion crowns ($135 million) at the end

of June this year, the central bank has said.

The investments are across 49 Russian companies, fund data

showed, with the biggest holdings in Sberbank, Lukoil

and Gazprom, fund data showed.

That includes stocks of Russian companies listed outside

Russia, or which have a secondary listing outside Russia, which

would not require approval from Moscow.

Among them are Novatek, Yandex, Evraz

, Globaltrans Investments and Ozon Holdings

, fund data showed.

In addition, the fund holds Russian roubles worth some 3.2

billion crowns in its custodian Citibank account with the

Russian National Settlement Depository (NSD), consisting of

dividends received in the period since Feb. 2022, it added.