Shell pulls cash out of 'high-risk' Europe

Oil giant, Shell, is attempting to reduce its exposure to the eurozone crisis by moving funds out of Europe and stashing it in safe havens like the US.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Shell is taking a hard line on the eurozone, chief financial officer Simon Henry has revealed. ‘There's been a shift in our willingness to take credit risk in Europe,’ he told The Times today. ‘The crisis has impacted our willingness to afford credit.’

The ‘credit’ Henry refers to concerns the billions of euros held by companies and bank vaults across Europe. The economies in Spain, Greece, Italy and a host of other beleaguered nations have been teetering on the edge of collapse, shored up only by hand-outs from the ECB and the dubious performance of various bond auctions. Henry is taking no risks with Shell’s dosh, and some $15bn will be transferred imminently, invested in US Treasuries and US bank accounts.  

Assets safely stowed, Shell also plans to hedge against risk in the eurozone by raising the price of doing business in the 17-nation bloc. Of course, not all eurozone countries will get the same treatment: ‘We differentiate between different credit risk,’ is Henry’s uncomfortable explanation. So German creditors will be charged a pittance, while the Italians will pay through their Roman noses.

And it’s not just the eurozone being penalized for poor economic stability – prices will also shoot up in the periphery nations.

Henry wouldn’t be doing his job if he wasn’t making some effort to reduce Shell’s exposure to the turbulent eurozone economies, even if it does rub salt into the bloc’s wounds. There’s only so much he can do, though. A fair wedge of cash must stay within the eurozone to pay local suppliers. But the move reflects a growing pessimism regarding the fate of the eurozone and the single currency.

The message from Shell is clear: the eurozone is a sinking ship. If many other large corporations follow Shell’s ‘take the money and run’ route, this could become a self-fulfilling prophecy…  

Find this article useful?

Get more great articles like this in your inbox every lunchtime

When should you step down as CEO?

Bob Iger's departure poses an unpopular question for bosses.

The death and resurrection of the premium customer

Top-end service is no longer at the discretion of the management.

What HS2 can teach you about project failure

And how you can prevent projects going astray.

35 Women Under 35 2020: Nominations open

Management Today's 35 Women Under 35 showcases the country's rising stars in business. Here's how...

Practical steps for breaking silos

Briefing: Adam Williams, former CEO of influencer marketing agency Takumi, shares what he has learned...

The Power 50: Proof that you can be a part-time CEO

Just a few years ago, executives were reluctant to admit they worked part-time for fear...