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Societe Generale ceases its banking and insurance activities in Russia

Published on April 11, 2022 - 3 mins reading time
Banks Companies

Societe Generale has announced that it is winding up its banking and insurance activities in Russia by selling its entire stake in Rosbank, as well as its insurance subsidiaries in the country. An agreement has been signed with the investment fund Interros Capital, as stated by the group, which is withdrawing due to the war in Ukraine, in a press release issued on Monday April 11.

Agreement signed with investment fund Interros Capital

More than a month after the outbreak of war in Ukraine, French bank Société Générale announced its withdrawal from Russia on Monday April 11.

"Societe Generale is ceasing its banking and insurance activities in Russia, and announces the signing of an agreement to sell its entire stake in Rosbank as well as its insurance subsidiaries in Russia to Interros Capital, Rosbank's previous shareholder," the group said in a statement.

Employing 12,000 people in Russia via its subsidiary Rosbank, Societe Generale had a significant activity in the country. Its exposure amounted to 18.6 billion euros, including 15.4 billion for Rosbank. Last year, the activities of its Russian subsidiary accounted for 2.7% of the banking group's net income, and 2.8% of its net banking income.

 

Negative impact "more than offset

Rosbank, the heavyweight of the Russian banking market, claims to have 5 million individual customers and several tens of thousands of business customers, including 9,000 customers in large companies and 78,000 in VSEs and SMEs.

According to Societe Generale's press release, the proposed transaction "remains subject to the approval of the relevant regulatory and competition authorities". The transaction is expected to be finalized in the coming weeks.

The sale of its entire stake in Rosbank, as well as its insurance subsidiaries in Russia, is expected to have a negative impact of 3.1 billion euros on the banking group's accounts.

In detail, Société Générale anticipates "the impairment of the net book value of the businesses sold", i.e. around €2 billion, and"an exceptional non-cash item with no impact on the Group's capital ratio", amounting to €1.1 billion.

However, this negative impact should be "very largely" offset by "the deconsolidation of the local exposure to Russia" and "a payment to Societe Generale including in particular the repayment by the purchaser of the subordinated debt granted by Societe Generale to its subsidiary".

Societe Generale shares jumped nearly 5% on the morning of Monday April 11, following the announcement that the French banking group would withdraw from Russia.