HSBC agrees to sell its Russian presence to Expobank and leave the country

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Diving Brief:

  • HSBC has agreed to sell its presence in Russia to Expobank, Reuters and Bloomberg reported Thursday. Financial terms of the deal were not disclosed.
  • The transaction will require the approval of a government commission in Russia. The country’s Deputy Finance Minister Alexei Moiseevsaid last week that Russia block the sale Russian activities of foreign banks in response to Western sanctions against Russian banks abroad, according to the Interfax news agency.
  • Rather than instituting a blanket ban on such transactions, the commission plans to individually review potential sales of foreign banks’ Russian imprints, Bloomberg reported, citing two officials familiar with the matter.

Overview of the dive:

Banking Dive and other media reported this month that HSBC and Expobank were in advanced talks on a deal that would finalize the British lender’s exit from Russia.

Expobank had previously been flagged as one of three potential buyers of Citi’s Russian footprint.

HSBC has approximately $1.4 billion in Russia-related assets. The bank had about 200 employees on the eve of Russia’s February 24 invasion of Ukraine, chief financial officer Ewen Stevenson said at the time, according to Reuters.

Several foreign banks trying to leave Russia have seriously posted job offers this month, according to the news service reported Thursday. Austria’s Raiffeisen Bank International posted 276 vacancies in Russia in July, according to Russian job site Headhunter. Citi, meanwhile, posted 84.

“The vacancies that have opened up are related to the fact that many employees left Russia after February 24,” an unnamed source from a foreign bank in Moscow told Reuters. “They just got up, resigned and fled in a wave of panic.”

Foreign banks accounted for 11% of Russian banking capital at the end of 2021, according to data from the country’s central bank, seen by the press service.

HSBC said in April it would not accept new business or customers at its Russian unit. However, it has not fully committed to withdrawing from Russia due to its responsibility to multinational client companies. HSBC closed its retail operations in Russia in 2011 to focus on business banking. It took a charge of $250 million in the first quarter of this year over its connection with Russian counterparties.

“Following a strategic review, HSBC has signed an agreement to sell 100% of its stake in HSBC Bank (RR) LLC to Expobank JSC,” HSBC said in a statement seen by Reuters and Bloomberg.

Expobank declined to comment on Bloomberg and did not immediately respond to Reuters.

The Russian lender has a history of growing by acquiring the footprints of other companies in the country. Expobank was Barclays’ Russian subsidiary until 2011 when Igor Kim bought it and grew the institution through acquisitions of Turkish company Yapi Kredi and assets of what is now NatWest.

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