City dealmaking has ground to a halt as investment bankers advise clients to put listings and acquisitions on hold as Russia’s invasion of Ukraine unsettles markets.

Senior investment bankers have urged companies they are advising to hold off on finalising deals while the uncertainty triggered by the crisis lingers.

One banker said holding fire on getting deals over the line was the “right thing to do” while they continue to assess the impact the war will have on market sentiment. 

It comes as new data from Dealogic revealed that acquisitions, listings and capital raisings in the Square Mile have dried up in recent weeks.

In the first week of March, just nine M&A deals were signed off in the City worth less than £600m. The previous week 36 deals worth more than £4bn were agreed. 

Meanwhile, just £41m was raised through London’s debt and equity markets in the same week – a significant reduction on previous weeks. 

The slowdown will cause concern as dealmaking so far in 2022 was already lagging the same period in previous years even before Russia’s invasion.

While 15 companies have already listed on London’s stock market – the same number at this stage last year – the value of the flotations has plunged to £517m compared to £5.7bn last year. 

Merger and acquisition activity has also halved from more 600 deals completed at this stage last year compared to just 300 in 2022, the data from Dealogic showed. 

Meanwhile, the City watchdog approached fund managers and banks last week enquiring about concerns around liquidity and exposure to Russia, according to City sources, as the regulator seeks to prepare for any fallout from the crisis.

One chief executive of a FTSE money manager said the Financial Conduct Authority (FCA) contacted the company’s compliance team enquiring about “fund liquidity”.

However, the regulator has not issued any new guidance to companies. The chief executive added: “They are correctly leaving it up to us to run our businesses and apply our judgement as we should.” 

While the City’s financial exposure to Russia is minimal, the FCA’s intervention highlights how regulators and officials are examining the potential risks involved. 

The FCA has also warned banks about the increased risk of cyber attacks by Russian-sponsored actors. 

It comes after Rishi Sunak urged fund managers to tell the London-listed companies they invest in that they must pull out of Russia as the West seeks to cripple the country’s economy. 

The Chancellor met with executives from Legal & General, Aviva, M&G, Phoenix and Fidelity earlier this month and told them to use their influence to “inflict as much economic damage as possible” on Vladimir Putin’s regime. 

Mr Sunak also said that institutional investors should ditch their own holdings in Russia, and asked what problems they were facing in selling the assets. 

Major UK institutional investors such as Legal & General, Aviva, M&G and Abrdn have agreed to divest  hundreds of millions of pounds-worth of Russia assets at the earliest possible opportunity.

However, the closure of Moscow’s stock exchange and a lack of liquidity in the market has prevented them from doing so.