Societe Generale SA would take a hit of about 3 billion euros (US$3.27 billion) after agreeing to sell its Rosbank PJSC unit to the investment firm of Russia’s richest man.
The Paris-based bank signed an accord to sell its entire stake in Rosbank and its Russian insurance subsidiaries to Vladimir Potanin’s Interros Capital, it said in a statement yesterday.
Despite the financial hit, Societe Generale said that it would continue with a planned stock buyback of 915 million euros and a dividend for last year of 1.65 euros per share.
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Societe Generale’s Russian business generated 2.7 percent of last year’s profit and accounts for 1.7 percent of the bank’s total exposure. Local activities are mainly exposed to retail and large corporate clients.
The bank’s decision to exit Russia is the most decisive yet among the largest European banks with operations in the nation. Raiffeisen Bank International AG and UniCredit SpA are mulling their futures in the country. The three banks are the biggest on the continent with Russian firms.
Societe Generale yesterday rose as much as 8.2 percent in Paris trading as the divestment removed uncertainty over the impact of the bank’s Russia business.
The sale is expected to close in the coming weeks, subject to approval by regulators and antitrust authorities, the bank said.
Potanin, 61, is the world’s 43rd richest person with a net worth of US$29.6 billion, according to the Bloomberg Billionaires Index. He is president of MMC Norilsk Nickel PJSC, which accounts for about 40 percent of global palladium output and 10 percent of refined nickel, and has a stake in Russian company Petrovax Pharm.
Societe Generale would have a 2 billion euro write-off on the net book value of the divested activities and an exceptional non-cash item of 1.1 billion euros related to the reversal of the conversion reserve in the group’s income statement.
The disposal would have an impact of about 20 basis points on the bank’s CET1 ratio, it said.
Societe Generale’s French peers BNP Paribas SA and Credit Agricole SA had announced that they would no longer take new business in Russia, joining a growing group of lenders that are pulling back from Russia amid wide-ranging sanctions imposed against the country.
In the past weeks, Goldman Sachs Group Inc, JPMorgan Chase & Co, Deutsche Bank AG and Commerzbank AG have all taken steps to cut business in Russia.
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