(Bloomberg) — Societe Generale SA will take a hit of about 3 billion euros ($3.3 billion) after agreeing to sell its Rosbank PJSC unit to the investment firm of Russia’s richest man.
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The Paris-based bank signed an accord to sell its entire stake in Rosbank and its Russian insurance subsidiaries to Vladimir Potanin’s Interros Capital, according to a statement on Monday. Despite the financial hit, SocGen said it’s sticking plans for a stock buyback of 915 million euros and 2021 dividend of 1.65 euros a share.
SocGen’s decision to exit Russia is the most decisive yet among the largest European banks with operations in the nation. Both Raiffeisen Bank International AG and UniCredit SpA are also considering their future in the country. The three banks are the biggest on the continent with Russian businesses.
SocGen rose as much as 8.2% in Paris trading on Monday as the divestment removed uncertainty over the impact of the bank’s Russia business. The sale is expected to close in the coming weeks, subject to approval by regulators and antitrust authorities, the bank said.
Potanin, 61, is the world’s 43rd richest person with a net worth of $29.6 billion, according to the Bloomberg Billionaires Index. He is president of MMC Norilsk Nickel PJSC, which accounts for about 40% of global palladium output and 10% of refined nickel, and has a stake in Russian company Petrovax Pharm.
Potanin had avoided sanctions by Western governments until Canada recently added him to its sanctions list.
SocGen will have a 2 billion euro write-off on the net book value of the divested 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 disposal will have an impact of about 20 basis points on the bank’s CET1 ratio, it said.
SocGen Chief Executive Officer Frederic Oudea last month signaled the bank planned to stay flexible in Russia, stopping short of joining European rivals pledging to review or exit their business in the country after the invasion.
The lender’s French peers BNP Paribas SA and Credit Agricole SA already announced they would no longer take new business in Russia, joining a growing group of lenders that are pulling back from Russia amid wide-ranging sanctions imposed against the country. In the past weeks, Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and Commerzbank AG have all taken steps to cut business in Russia.
SocGen’s Russian business generated 2.7% of last year’s profit and accounts for 1.7% of the bank’s total exposure. Local activities are mainly exposed to retail and large corporate clients.
(Adds shares in fourth paragraph, background on Potanin from fifth.)
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