French bank Societe Generale exits Russia

French bank Societe Generale exits Russia

French bank Societe Generale exits Russia

French banking group Societe Generale said yesterday it was ceasing activities in Russia and selling its majority stake in Rosbank, weeks after Ukraine’s leader urged French firms to leave over Moscow’s invasion of his country.

Societe Generale said in a statement that its withdrawal from Russia would cost it 3.1 billion euros ($3.4 billion). “Societe Generale ceases its banking and insurance activities in Russia,” the firm said.

It also announced “the signing of a sale and purchase agreement to sell its entire stake in Rosbank and the Group’s Russian insurance subsidiaries” to Interros Capital, an investment firm founded by one of Russia’s richest oligarchs, Kremlin confidant Vladimir Potanin.

“With this agreement, concluded after several weeks of intensive work, the group would exit in an effective and orderly manner from Russia, ensuring continuity for its employees and clients,” Societe Generale said.

The bank said it expects the deal to be completed in the coming weeks and that it was subject to approval from regulators.

Societe Generale shares sank by more than 5 percent following its announcement.

In a separate statement, Interros said that “the conditions for the deal have been approved by the government commission on control over foreign investment in the Russia Federation.”

“Interros intends to do the maximum efforts to develop Rosbank,” Potanin said in his company’s statement. “The main objective is to maintain the stability of Rosbank, as well as create new opportunities for its clients and partners,” he said.

In a statement, Rosbank said it was “certain” that the firm would maintain its stability thanks to its “expertise” and reliance on “international expertise.”

The Russian bank said it built “great resistance” to economic turmoil due to its “well-thought-out risk policy” as well as its balanced loan portfolio and diversified liquidity base.

Hundreds of foreign companies, ranging from financial firms to retailers and fast-food restaurants, have pulled out of Russia since the Feb. 24 invasion.

But French firms, which are the biggest foreign employers in Russia, have been among the slowest to withdraw, prompting Ukrainian President Volodymyr Zelensky to urge them to leave during an address to the French parliament on March 23.

The Western exodus followed the invasion and a slew of Western sanctions on Russia, including the freezing of $300 billion of the country’s foreign currency reserves abroad.

Russia has since faced the risk of defaulting on its debt.

Ericsson suspends all Russia ops

Swedish network equipment maker Ericsson said yesterday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than 2 percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.