FT: foreign banks had problems trying to sell Russian subsidiaries

Advisors to Western banks trying to leave Russia are complaining about the impossibility of doing so because of a law introduced by Vladimir Putin that allows transactions with foreign banks only with special permission, reports Financial Times (FT). The list of banks subject to the ban includes 46 credit institutions, including Raiffeisenbank, Unicredit, Citibank, and Deutsche Bank.

Unnamed banking advisers fear that the Russian president’s intervention will disrupt some deals that have already been agreed upon and “fundamentally change the terms” of others. They expect already agreed sales amounts to “halve” as the Kremlin “wields more influence over deals.” “There are some very powerful Russians with close ties to the Kremlin who are trying to use their influence to take over these organizations from fleeing foreigners,” one source told the FT. About what Russians and banks there is a speech, he did not specify.

In particular, after the entry into force of the presidential decree, the sale of HSBC Bank, a subsidiary of HSBC, was suspended. It was supposed to be bought by the Russian Expobank, the deal was agreed upon in the summer of 2022, before the decree of Mr. Putin. HSBC said it was trying to finalize the deal. According to the FT source, Expobank still needs to get the president’s approval.

October 26, 2022 Vladimir Putin approved a list of 45 banks in which it is impossible to make transactions with the shares of foreigners from “unfriendly” countries. Experts notedthat such a scheme allows not only to control the actions of bank owners, but also to influence the choice of a possible friendly buyer of shares in them. Head of the Central Bank of the Russian Federation Elvira Nabiullina spoke about the absence of the need to save the “daughters” of foreign banks.

About the withdrawal of foreign banks – in the appendix “Kommersant” “Banks on the stream”.

Laura Keffer