SocGen becomes first major European financial group to announce exit from Russia

MOSCOW. April 11 (Interfax) - France's Societe Generale has become the first major European financial group to announce that it is leaving the Russian market.

The group said it has signed an agreement to sell its main asset in Russia, Rosbank , as well as its insurance business to Interros Group, the Russian bank's former shareholder. Societe Generale owns more than 99% of Rosbank.

Foreign banks began thinking about exiting Russia after the start of the military operation in Ukraine and the imposition of tough sanctions by the United States, UK and European Union against the Russian economy and financial sector.

Societe Generale is one of the European banks with the greatest risk exposure to Russia, alongside Austria's Raiffeisen Bank International and Italy's UniCredit. The group estimated it exposure to Russia at 18.6 billion euros, or 1.7% of total group risk at the end of 2021, of which Rosbank accounted for 15.4 billion euros. The Russian business generated 2.8% of the group's net banking income and 2.7% of its net income.

"Societe Generale ceases its banking and insurance activities in Russia and announces 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, the previous shareholder of Rosbank. 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," the French group said.

The deal, which is subject to the approval of the relevant regulatory and anti-trust authorities, is expected to close in the coming weeks, the group said.

Rosbank is classified as a systemically important lender in Russia, and was the country's eleventh largest bank by assets at the end of 2021, according to the Interfax-100 ranking. Rosbank's IFRS assets stood at 1.4 trillion rubles at the end of the first nine months of 2021 and capital totalled 200.7 billion rubles (the bank has not released financial statements for the year yet). The bank posted a net profit of 15.5 billion rubles for the nine months.