Russia to seize £620m dividend meant for British pension funds

PENSIONERS face a £620m raid on their dividends as Russia prepares to seize a payment meant for BP amid a crackdown on financial transactions with “unfriendly states”.

The British oil behemoth is to miss out on money due from its 20pc stake in Russian energy company Rosneft, which is paying its own investors a record annual dividend of £5.5bn after its profits jumped on the back of rising commodity prices.

BP’S share of this cash will be held in Russia after Vladimir Putin launched a crackdown on distributions to Western countries and their allies. The Bank of Russia first banned companies from paying dividends to overseas shareholders in March, while the Russian government later signed a decree blocking payments to entities from countries committing “unfriendly actions” against the state.

Britain has been added to the list of banned states alongside the US, the EU, Switzerland, Australia and others.

BP made its investment in Rosneft in 2003 and has since received £15bn in dividends. British pensioners have benefited from the income as BP is one of the top dividend payers on the FTSE 100.

It came under pressure to abandon its shareholding shortly after Putin’s invasion of Ukraine. Bernard Looney, BP’S chief executive, was quizzed on his plans for the stake in Rosneft by Business Secretary Kwasi Kwarteng following the outbreak of conflict. The British oil major then announced it was abandoning the stake and giving up its two seats on Rosneft’s board. However, BP has not offloaded its shareholding in Rosneft, instead writing down the value of the stake and treating it as a financial asset with no expected income.

Russia’s decree orders companies to pay dividends exceeding 10m roubles (£122,500) into a bank account set up in the name of the sanctioned foreign entity. The funds in these accounts can then be used to pay taxes, fees levied by Moscow or to buy Russian debt.

A BP spokesman said: “We’ve seen the announcement made today by Rosneft regarding dividend payments. We’re monitoring the situation but have no further comment on this. We are continuing to pursue our exit from the Rosneft shareholding.”