Column by Ksenia Dementieva about the vicissitudes of the fate of foreign banks in Russia

Foreign-owned banks forced to leave Russia are a priori considered an enviable asset. Western shareholders are known for their reverent attitude to reputation. In addition, the sale is endorsed at the highest level. According to the current legislation, transactions with shares of unfriendly non-residents, in particular 45 credit institutions, are prohibited without the special permission of Russian President Vladimir Putin.

However, as you know, there are exceptions to any rule. Thus, on Wednesday, Vladimir Putin approved a deal to exit J&T Banka (J&T Bank) from the Russian market. The bank is part of the J&T Finance Group SE, which operates in Slovakia, Croatia and Germany. Its ultimate beneficiaries, according to the latest disclosed data, are Czech citizens Josef Tkach and Ivan Jakabovich, who own 45.05% each, as well as the Chinese Citic Group with a 9.9% share. After the outbreak of hostilities, the group’s business in Russia was curtailed. The bank’s assets at the end of 2022 amounted to 22.6 billion rubles, capital – 7.9 billion rubles.

The bank’s shares are bought out by Bureaucrat LLC, the sole shareholder of Realist-bank. “The purchase will allow finding a new vector for the development and strengthening of the accumulated experience, as well as strengthening the position in the financial services market and creating a synergistic effect to increase the volume of business in servicing SME clients and lending to the real sector of the economy,” they said.

It would seem that a small Realist bank won the jackpot. Got cheap foreign player with reputation and business. However, Kommersant’s interlocutors in the banking market agree that from the point of view of business development, the purchase of an asset does not make sense. “The business of J&T Bank was concentrated around the interests of its shareholders and has been mothballed for quite some time,” one of them explains. “The purchase could be explained by a desire to acquire a license, but Bureaucrat has a bank.”

And the reputation of J&T Bank leaves much to be desired. Its shares were seized as part of a criminal case on the double sale of Bankhaus Erbe. J&T was the second buyer. “This is a fairly recent story, and obviously, the buyer is aware,” says one of Kommersant’s interlocutors. “But no one remembers this now.”

However, the buyer will remain in the black, he receives the bank with a discount of at least 50% of the capital (according to the government’s order), and probably even more significant, given the criminal case. After the change of ownership, and agreed upon at the very top, the history will be forgotten, and the bank will remain with the capital, after it is merged with its bank or sold, “Bureaucrat” will win in any case.