UniCredit Initiates Steps to Exit Russia
UniCredit, a major Italian banking institution, is reportedly taking steps to significantly scale back its operations in Russia. According to reports in the Russian business daily, Kommersant, several senior executives have left the bank and a substantial proportion of its leasing assets have been shed.
Kirill Zhukov-Emelyanov, who has been at the helm of UniCredit’s Russian subsidiary for five years and has over two decades of experience working at the bank, has vacated his position. Vadim Aparakhov, the head of corporate and investment banking, and Olga Petrova, the chief operating officer, have also tendered their resignations.
Shedding Leasing Assets
In a significant move, UniCredit sold almost all its long-term leasing portfolio from its subsidiary, UniCredit Leasing, to Russia-based PR-Leasing. Contracts worth approximately Rbs3bn ($39m) were transferred as part of the deal, with the remaining portion expected to be settled imminently.
Oleg Abelev, the head of analytics at Rikom-Trust, told Kommersant: “The simultaneous departure of key top managers and the sale of a major asset is a clear sign the bank is preparing for a full withdrawal from the country.”
European Regulators’ Directive
UniCredit’s move to scale down its operations in Russia comes in the wake of European regulators encouraging the bank to reduce its Russian business to a level similar to that of Intesa, another Italian bank that continues to operate in the Russian market.
Andrea Orcel, CEO of UniCredit, has previously admitted that the bank has been attempting to exit Russia since 2022 but has encountered challenges due to sanctions.
Potential Acquisition and Monitoring
Russian authorities are keeping a close watch on foreign banks for any actions that could potentially lead to nationalisation. Such a move could result in significant capital loss for these banks.
Several companies from the UAE, including Asas Capital, Mada Capital, and Inweasta, have shown interest in acquiring UniCredit’s Russian subsidiary. This follows a report last month that Russian President Vladimir Putin had authorised the sale of Citibank’s remaining Russian operations to Renaissance Capital, a domestic investment bank not subject to Western sanctions, via a presidential decree.
Challenges for Western Companies
Following the exit of several Western companies from Russia in February 2022 due to the Russia-Ukraine conflict, the Russian government has imposed strict requirements on foreign companies seeking to leave the country. This includes significant reductions in asset valuations and mandatory contributions to the state budget, thereby complicating the process for Western companies intending to exit the Russian market.
Earlier this year, UniCredit had to withdraw from its agreement to acquire Banco BPM because the Italian government made its approval contingent on UniCredit ceasing its operations in Russia.
As this situation continues to evolve, it is clear that UniCredit’s decision to scale back its operations in Russia will have far-reaching implications for the bank and the wider financial sector.
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