Blackrock asset management firm has witnessed a loss of $17 billion due to a drop in the value of Russian assets amid the country's invasion of Ukraine that has stepped into the second month. The assets held by its clients by the end of January were valued at $18.2 billion.
The Western allies' sanctions imposed on Russia and extreme market volatility due to conflict in Ukraine left the firm unable to shift the assets and therefore a dramatic drop in the value has turned up.
The largest asset manager in the world is equipped with about $10 trillion AUM. It has suspended buying of Russian assets stating the fall in the holdings account to less than 0.01 percent of the assets it manages.
Meanwhile, the US-based Pimco firm holds about $1.5 billion of sovereign debt as well as $1.1 billion of bets on the country through the credit-default swap market. Western Assets, Ashmore and Janus Henderson too have Russian debt market exposure.
BlackRock spokesperson stated the Russian asset's exposure of the clients is basically driven by the index strategies and is held among dozens of portfolios. The exposure of clients to Russian assets before the conflict accountedÂ for 0.18 percent of the total AUM.
Today, the Russian assets account for less than 0.10 percent of the total AUM of the firm. Client impacts would be based on the initial asset allocation as well as the timing of the allocation during the period started on February 24 when Russia first initiated the invasion.
BlackRock is in consultation with the index providers and regulators to ensure the exit of clients from their positions at suitable and permissible conditions.
The Western allies have imposed a ban on oil and gas from Russia as well as the Russian banks have been removed from the international SWIFT payment systems to force the country to become economically weak. However, the measure has led to a serious crisis in the supply of fuel in several European countries. The cost of living is rising with the rise in inflation rates. Food and fuel prices have increased.
Russia and China have condemned the sanctions over the Ukraine issue. Finland's VR Group rail operator has resumed rail services to Russia following a week of a halt due to UK sanctions.
Meanwhile, the Russian troops, tanks and missiles have destroyed key cities and towns in Ukraine and the confrontation is currently in the capital Kyiv. Millions of Ukrainians have been displaced amid the war. The United States and NARO have denied entering into direct conflict with Russia in Ukraine fearing it may lead to World War III.