The multinational has announced that it is ceasing its banking and insurance activities in Russia and has announced the signing of a sale and purchase agreement with Interros Capital, for the sale of all of its Russian insurance subsidiaries, as well as its 99.98 per cent stake in Rosbank.
The sale was agreed for an undisclosed sum, and is subject to regulatory and anti-trust approval. The transaction is expected to close in the coming weeks. SocGen says the write-off of the net book value of the divested activities is estimated to be around €2 billion, with a further non-cash write-off of €1.1bn.
In a statement, SocGen said that the agreement, ‘concluded after several weeks of intensive work’, would enable the company to ‘exit in an effective and orderly manner from Russia, ensuring continuity for its employees and clients’.
Russia’s foreign investment commission has approved the terms of the sale
Interros confirmed that the terms of the transaction were agreed with the Russian government’s Commission on Monitoring Foreign Investment.
Interros, founded in 1990, is one of Russia’s largest private investment companies, and previously sold its share in Rosbank to SocGen in 2006, with SocGen later cementing its control over the business two years later.
The move by SocGen to sell all its Russian assets reflects a growing unwillingness by the financial sector to operate in the Russian market following the Ukrainian invasion, as well as the imposition of strong sanctions by western governments which includes a partial suspension from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) financial messaging network.
Following the invasion on 24 February, insurers such as Allianz, Swiss Re, Hannover Re and Zurich announced that they would suspend most operations in Russia.
In addition to the insurance sector, the Russia-Ukraine conflict is also expected to cause significant pain to other industries as well, including an estimated US$10.6 billion in lost tourism revenue across Ukraine, Russia, Belarus and Moldova.