(Bloomberg) — Société Générale SA agreed to sell its Rosbank PJSC unit to the investment firm of Russia's richest man, assuming an impact of around 3 billion euros (US$3.3 billion) to leave the nation that has been subject to extensive sanctions.
The Paris-based bank signed an agreement to sell all of its stake in Rosbank and its Russian insurance subsidiaries to Vladimir Potanin's Interros Capital, according to a statement released Monday. Despite the financial blow, SocGen said it maintains its share buyback plans for 915 million euros and a dividend for 2021 of 1.65 euros per share.
SocGen's decision to leave Russia is the strongest yet among the largest European banks operating in the country. Both Raiffeisen Bank International AG and UniCredit SpA are also analyzing their future in the country. The three banks are the largest on the continent with business in Russia.
SocGen “had not previously stated its intention to leave the country, and this should be a welcome surprise for the market,” analysts from Citigroup Inc. said in a note.
Following the news, SocGen rose on Monday in Paris operations, as the divestment removed uncertainty about the impact of the bank's business in Russia. The sale is expected to close in the coming weeks, subject to approval from regulators and antitrust authorities, the bank said.
Potanin, 61, is ranked 43rd on Bloomberg's Billionaire Index, with a net worth of $29.6 billion. He is president of MMC Norilsk Nickel PJSC, which accounts for around 40% of world palladium production and 10% of refined nickel, and holds a stake in the Russian company Petrovax Pharm.
Potanin had avoided Western government sanctions until Canada recently added it to its list.
SocGen will have a loss of 2 billion euros in the net book value of the transferred activities and an exceptional non-cash item of 1.1 billion euros related to the reversal of the conversion reserve in the group's income statement. The sale will have an impact of about 20 basis points on the bank's CET1 ratio, he said.
Last month, SocGen CEO Frederic Oudea noted that the bank planned to remain flexible in Russia, without joining European rivals who promised to review or abandon their business in the country after the invasion. At the same time, the bank had taken a cautious stance since the beginning of the war and was one of the first lenders to stop financing the commodity trade from Russia.
SocGen's full exit from its Russian unit, Rosbank, with CET1 impact comfortably below previous guidance and confirmed payment plans for 2021, is a welcome relief, said Bloomberg Intelligen banking sector analyst Jonathan Tyce. The cancellation of the net book value of 2 billion euros and the non-cash item are comfortably manageable, he added.
SocGen's Russian business generated 2.7% of last year's profits and accounts for 1.7% of the bank's total exposure. Local activities are mainly exposed to retail customers and large companies.
Original Note:
SocGen to Sell Rosbank to Billionaire Potanin in Russia Exit (3)
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