25 Oct 2022 14:28

HSBC still planning to sell Russian subsidiary despite negative signals from authorities regarding potential deal

MOSCOW. Oct 25 (Interfax) - HSBC still plans to sell its Russian operation, according to the British bank's Q3 earnings report.

Reported revenue of $36.9 billion was 2% lower than in 9M 2021, primarily due to an impairment of $2.4 billion recognized following the reclassification of HSBC's retail banking business in France as held for sale as well as losses of $0.4 billion associated with the planned sales of branch operations in Greece and operations in Russia, the bank said in the report.

It emerged in July that HSBC had signed an agreement to sell 100% of its Russian subsidiary HSBC Bank to Expobank. HSBC said later that the deal still requires the approval of a number of Russian regulators. Expobank declined to comment.

The Russian Finance Ministry said the subcommittee of the Government Commission on Monitoring Foreign Investment had not received a request to sell the Russian subsidiary of HSBC. Neither had the Bank of Russia.

Russian Deputy Finance Minister Alexei Moiseyev said in mid-July that the authorities would not authorize the sale of Russian assets by foreign banks in response to measures against Russian banks abroad. Decisions on requests to sell the subsidiaries of foreign banks will be taken individually, and the Russian government commission will consider the attitude toward Russian banks in the countries where the sellers are registered, Central Bank Governor Elvira Nabiullina said.

But Russian President Vladimir Putin has banned entities from unfriendly countries from selling shares in Russian banks until the end of 2022 except with his special permission. The restrictions may be extended by decision of the president.

HSBC left retail banking in Russia several years ago and now mainly deals with corporate clients. According to the Interfax-100 ranking, the total assets of HSBC Bank came to 89.2 billion rubles at the end of 2021, making it the country's 70th biggest bank by assets.

HSBC said in April that its subsidiary bank in Russia was no longer taking on new clients. HSBC Group had expenses of $250 million related to Russian counterparties in the first quarter.

Expobank, which belongs to Russian businessman Igor Kim, has offices in more than 50 Russian cities and does corporate and retail business. Neither the bank nor its owner have been sanctioned.