DMajor French bank Societe Generale (SocGen) is selling its Russian affiliate Rosbank and its insurance business to Russian oligarch Vladimir Potanin. With the agreement, the bank withdraws from Russia in an orderly manner while guaranteeing continuity for its employees and clients, the French institute announced earlier this week.
Billionaire Potanin is the largest shareholder in the nickel group Norilsk Nickel. The 61-year-old has been sanctioned in Canada, but is not on the sanctions lists in Europe and the United States. Potanin acquires Rosbank through its Interros Capital holding company.
For the French, the withdrawal is a losing business: SocGen has to digest a total of 3,000 million euros in expenses. No financial details of the deal were released. However, SocGen said that Interros had agreed to pay Rosbank’s subordinated debt. The Common Equity Tier 1 ratio will fall by about 0.2 percentage point over the course of the transaction. However, SocGen wants to stick to share buyback and dividend plans.
Second richest Russian
Investors were glad that the uncertainty was over. SocGen shares rose more than 6 percent in Paris on Monday afternoon. “Russia contributes only 2 percent to earnings, but SocGen’s share price is up 7 percent today, even though it essentially gives the business away,” Morningstar analyst Johann Scholtz said of the deal. This shows what price discounts would be made in the market for possible Russian risks. However, the deal still needs to be approved by authorities.
The major French bank joined Rosbank in 2006 and merged its own Russian activities with the institute in 2010. SocGen paid $317 million for its initial 10 percent stake in Rosbank. Following the Russian invasion of Ukraine and the subsequent sanctions imposed, many Western companies have withdrawn from Russia or have announced that they will do so.
According to Forbes magazine, Potanin is the second richest Russian with assets of around $27 billion. His rise began in the Ministry of Foreign Trade of the former Soviet Union. He worked part-time as a banker before founding Interros in 1990, which acts as the parent company for his many activities, ranging from metal production to a ski resort. (Report by Tassilo Hummel.