The US Treasury Department (USTD) formally lifted the April 6 round of sanctions on the companies belonging to Russian oligarch and Kremlin insider Oleg Deripaska, but left those that target the businessmen personally in place.

As part of the deal state-owned bank VTB, a big creditor of Deripaska, increased its stake in his energy holding En+ to 22.27% from 7.65%, Vedomosti reported on January 28.

“We are positive about the latest decision of the US Treasury and we believe that the dynamics of this situation will be favourable for En+, Rusal and Eurosibenergo, as well as for institutional investors in general,” a VTB bank representative said in a statement.

Last year the USTD for the first time hit Russian companies with ties to Russian President Vladimir Putin and banned US citizens (and by extension anyone doing business with US citizens or legal entities) from doing business with, or holding securities of, any company associated with oligarchs listed in the sanctions.

But the USTD quickly found it had bitten off more than it could chew as the sanctions caused chaos in the metal markets and threatened to bounce back and do US and European business harm. Specifically, one of Deripaska’s most important companies is Rusal that is a major player on the international metals market. The price for aluminium soared and manufacturers warned of shortages. In addition, major investment banks and funds faced hundreds of millions of dollars in losses as they were exposed to Rusal stocks and bonds, which the sanctions made impossible to sell.

The USTD quickly extended the deadline on the sanctions from May to December. As the year came to a close a deal was thrashed out whereby Deripaska agreed to give up control over his companies and the sanctions have now been formally dropped — the first time since Russia annexed the Crimea that any sanctions on Russia have been withdrawn.

Under the terms of the deal cut with the USTD the structure of the companies has to be changed. In a separate statement, En+ announced the addition of seven independent directors to its board. In addition to VTB increasing its stake, there is also a securities swap with Ivan Glasenberg’s Glencore Plc. Under that deal, the London-listed commodity trader will get global depositary receipts representing 10.55% of En+’s enlarged share capital in exchange for its existing 8.75% percent stake in Rusal.

Rusal said that chairman Jean-Pierre Thomas had resigned as a director after an “imperative request” from USTD as a condition for lifting the sanctions. He became chairman in December, replacing Matthias Warnig, who has a long career in Russia and was the former head of Dresnder bank in Russia. A former East German Stasi agent, he has also known Putin since at least 1991. Thomas’ appointment drew criticism from American media and some lawmakers during debates in Congress in January because of his calls for investment in the Crimea. His departure was effective from January 26, Bloomberg reports.

In addition to the personal sanctions on Deripaska the USTD has also kept sanctions on his car maker GAZ and Russian Machines that controls the company.

As part of the transfer of the packet of shares to VTB the bank reportedly will forgive debt the companies owe to the bank, however, last week first deputy president and chairman of VTB’s board Yuri Solovyev denied reports in the New York Times that any debt was being forgiven.

Shares in En + and Rusal both rallied strongly following the decision to lift the sanctions, however, the share price of both companies remains underwater compared to where they were prior to the impositions of sanctions last year.

The news has also lifted the whole market with the MOEX index rising to a new all time high of 2502.7 on January 28. The previous record was set in October at 2501.8, however, following the ruble’s loss of 20% of its value against the dollar last year the market has done well to still return 5% YTD.

The dollar denominated Russia Trading System (RTS) also rallied to 1195 on the news and overall the RTS is up 11% YTD having been essentially flat over 2018.

In London the London Metal Exchange (LME) lifted a ban on trading Rusal’s aluminium last April that will calm the markets.

“Following the USTD decision to lift sanctions against UC Rusal, the LME has lifted all previous restrictions on metal warrants with the UC Rusal brand. Participants can also enter into contracts with UC Rusal. These changes take effect immediately,” a representative of the LME said.