A French investment bank is taking a €3.1bn (£2.6bn) hit from selling its Russian unit to a company founded by a sanctioned oligarch.
Société Générale (SocGen), one of France’s oldest lenders, said it will offload its entire stake in Rosbank and its Russian insurance subsidiaries to Interros Capital, Vladimir Potanin’s investment firm.
Mr Potanin is Russia’s wealthiest man, worth an estimated $30bn (£23bn), and was placed on Canada’s sanctions list last week.
So far, he has not been sanctioned by the UK, EU or the US.
SocGen was one of the European finance giants with the largest exposure to Russia and the €3.1bn write-off highlights how damaging Vladimir Putin’s war has been to businesses that built up significant operations in the country.
Jerome Legras, the head of research at Axiom Alternative Investments, told Reuters: “It’s a bit distressing that ultimately this is an enormous gift to one of the wealthiest oligarchs.”
The Paris-based lender first acquired a stake in Rosbank in 2006 from Interros and took a majority holding two years later.
The Russian bank was then fully merged with SocGen’s other Russia operations in 2010.
Last month, SocGen’s chief executive Frédéric Oudéa said the bank would “remain flexible” in Russia, falling short of announcing a full departure like hundreds of other western companies with operations in the country.
However, the decision represents the most decisive move yet among the largest European banks with operations in Russia.
Austrian lender Raiffeisen and Italy’s UniCredit, who also have sizable Russian businesses, have said they are considering their future in the country but have yet to announce any concrete plans.
SocGen and Interros said that the deal should be completed in the coming weeks after all necessary approvals from regulators.
SocGen’s Russian business generated nearly 3pc of its overall profit last year. Rosbank has around 13,000 employees and 5m customers.
Mr Potanin said: “Interros intends to make every effort to develop Rosbank’s business, considering the integration of digital technologies and products into the traditional banking services as a priority.
“The most important goal of Interros is to maintain the stability of Rosbank and create new opportunities for its clients and partners.”
He amassed his fortune as head of mining giant Norilsk Nickel, of which he remains the biggest shareholder.