HomeStock MarketPutin approves HSBC to sell Russian unit to Expobank, allowing the transaction...

Putin approves HSBC to sell Russian unit to Expobank, allowing the transaction to proceed.

HSBC to Sell Russian Unit to Expobank

After months of negotiations, Russian President Vladimir Putin has given approval for HSBC to sell its Russian unit to Expobank, a privately-owned institution. This move marks the British lender’s exit from the Russian market and comes in the wake of Moscow’s tightened restrictions on foreign asset sales.

HSBC announced the sale of a 100% stake in its unit, HSBC Bank (RR) LLC, to Expobank in June 2022. The process faced hurdles as Moscow demanded Putin’s approval for any deal involving banks. The recent approval now paves the way for the deal to proceed.

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No immediate comments were available from HSBC and Expobank regarding this development.

This approval sets the stage for a potential full exit from Russia for HSBC, which has a global business presence in China and the United States. The timing of this decision aligns with the upcoming presentation of HSBC’s full-year earnings for 2023 to investors on Wednesday.

Last year, HSBC reported a $300 million loss on the anticipated sale of its Russian business. Moscow’s demand for at least a 50% discount on foreign asset sales has made it challenging for Western banks to sever ties completely.

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The decree by Putin allows Expobank to acquire 100% of HSBC’s Russian unit. This decision is in line with an August 5, 2022 decree that restricts investors from “unfriendly” countries, thereby giving Putin the authority to issue special waivers for such deals to proceed.

HSBC, being Europe’s largest bank, announced in September that it would halt commercial payments to and from Russia and Belarus due to increasing operational challenges arising from sanctions.

The impact of the sanctions on Expobank, which was sanctioned by the United States in December, remains uncertain.

Although Putin’s approval is a significant step, it does not guarantee the success of the deal. Italian bank Intesa Sanpaolo, which secured Putin’s approval to sell its assets in Russia in September 2023, is yet to finalize its transaction.

Considering that the Russian unit had a revenue of about $15 million, which is relatively small compared to HSBC’s global revenue of over $50 billion, the financial impact of this deal on HSBC is expected to be minimal.

Expobank’s sanctioning by the United States in December was part of broader restrictions aimed at curbing Russia’s energy and financial sectors following its military intervention in Ukraine in February 2022.

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