French banking group Societe Generale said on Monday it was ceasing activities in Russia and selling its Rosbank unit to an investment firm founded by an oligarch close to the Kremlin.
The exit will cost the firm 3.1 billion euros ($3.4 billion).
Hundreds of foreign companies, from financial firms to fast-food restaurants, have pulled out of Russia since the February 24 invasion of Ukraine.
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.
Societe Generale is heavily involved in Russia, with exposure of 18.6 billion euros. Of that, 15.4 billion euros was linked to Rosbank, a heavyweight in the Russian banking sector, in which Societe General is the main shareholder.
Shares in Societe Generale ended the day 5.0 percent higher.
“Societe Generale ceases its banking and insurance activities in Russia,” the firm said in a statement.
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, Vladimir Potanin.
Potanin, who is close to President Vladimir Putin, is also the co-owner of Russian mining giant Norilsk Nickel.
“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 expected the deal to be completed in the coming weeks and that it was subject to approval from regulators.
The bank said it would write off some two billion euros of the net book value of the divested activities and take a further 1.1-billion-euro non-cash hit.
“One could criticise the decision to sell to this type of buyer but on the other hand there weren’t many people queuing up to buy,” an expert who declined to be identified told AFP.
He said the conditions under which the sale had taken place had been “very complicated” and “limited to candidates already in situ”.
Societe Generale had held talks with other prospective buyers, a source close to the bank told AFP.
– ‘Great resistance’ –
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.
Meanwhile, Societe Generale’s auto leasing subsidiary, ALD, said it would not enter into new commercial transactions in Russia, Kazakhstan and Belarus.
Since Zelensky’s speech to the French parliament, auto giant Renault suspended operations at its Moscow factory and hinted that it might divest its majority stake in domestic car giant AvtoVAZ, while French sports retailer Decathlon halted sales at its stores in Russia.
Another major French company singled out by Zelensky, supermarket chain Auchan, has decided to stay, citing the “human” cost of leaving.
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.
