On Thursday, the US bank in New York announced that it would close 15 branches with around 2,300 employees in Russia.
(Photo: Reuters)
Frankfurt The major American bank Citi has made a decision about its business in Russia: it will start processing its branch business. The institute announced this on Thursday. Accordingly, the 15 branches with around 2,300 employees in Russia are to be closed.
“We have explored several strategic options over the past few months,” said Citi manager Titi Cole. In view of “many aggravating factors” it is now clear that the transaction makes the most sense. The US bank expects the transaction to cost $170 million, but it is likely to stretch over the next 18 months.
It is also clear that a possible sale of the Russian business has failed. According to the Wall Street Journal, negotiations with the Russian bank VTB failed due to Western sanctions. According to reports, Citi is also said to have negotiated the sale of part of its Russian business with the Russian money house Expobank.
The money house had already announced in 2021 that it wanted to withdraw from Russia, but has intensified its efforts in recent months. In total, Citi has had around 3,000 employees on site so far. In the future, the bank wants to continue to look after multinational corporations in Russia. Citi will also continue to actively pursue the separate sale of parts of the private customer business, a Citi spokesman told Handelsblatt.
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Since the Russian invasion of Ukraine, international banks have reconsidered their activities in Russia. The institutes with great commitment include the Austrian Raiffeisenbank International, the major Italian bank Unicredit and also Citi. According to its own statements, Citi was still involved in Russia at the end of June with a total business volume of 8.4 billion dollars.
So far, of the European banks with exposure to Russia, only the French Société Générale (SocGen) has completed a sale.
Withdrawal from Russia is becoming increasingly difficult
Citi’s move is also an indication that it is becoming increasingly difficult for Western banks to exit Russia. The Ministry of Finance and the Central Bank are apparently at odds about the joint strategy. The Russian Treasury wants to block the sale of Russian subsidiaries of foreign banks.
“We discussed in our sub-commission that now, until the situation improves, we will not issue approval for the sale of subsidiaries of foreign banks and their assets in Russia,” Deputy Finance Minister Alexei Moiseyev said, according to Russia’s Interfax agency last week Month.
So far, however, the Russian central bank has been skeptical. Elvira Nabiullina, the head of the central bank, says that decisions on the sale of subsidiaries of foreign banks in Russia must be made individually. In addition, events depended on the attitude towards Russian banks abroad. In her opinion, however, it makes no sense to now take over the management of the subsidiaries yourself.
Both the ministry of Deputy Finance Minister Moiseyev and the Russian Central Bank have to approve such sales. At the central bank, this is always the case when shares of more than ten percent are acquired.
The major British bank HSBC is also aiming for a sale. According to its own statements, it has agreed on a sale to Expobank. “Following a strategic review, HSBC has signed an agreement to sell 100 percent of its interests in HSBC Bank (RR) LLC to Expobank JSC,” a spokesman said.
The completion of the transaction still has to be approved by the Russian authorities. The outcome should be another indication of how Russia deals with the subsidiaries of foreign financial institutions.
More: Putin makes it difficult for foreign companies to exit business with Russia