Business

Russia to block sale of foreign banks’ Russian subsidiaries -Ifax cites finance ministry

Russia will block the sale of foreign banks’ Russian subsidiaries while Russian banks abroad cannot function normally, the Interfax news agency cited Deputy Finance Minister Alexei Moiseev as saying on Friday.

“We discussed this at our subcommission, that we will not now, until the situation improves, give permission for the sale of foreign banks’ subsidiaries and their assets in Russia,” Interfax quoted Moiseev as saying.

Russia’s central bank is resisting domestic calls to take over the running of foreign lenders’ local businesses, two sources with direct knowledge of the matter have told Reuters, concerned in part that this could prompt depositors to pull out funds.

Moiseev did not rule out that the finance ministry could support the idea of placing banks’ Russian subsidiaries under the control of Russian state banks in the future, RIA news agency reported.

French lender Societe Generale (SOGN.PA) has sold its Rosbank unit to Interros Capital, a firm linked to Russian oligarch Vladimir Potanin, but others, including Raiffeisen (RBIV.VI), UniCredit (CRDI.MI) and Citi (C.N), the biggest three units of Western banks in Russia, are still exploring options.

Those three held 3.5 trillion roubles ($60.3 billion) in assets compared with 38 trillion roubles at top Russian player Sberbank (SBER.MM) at the end of 2021, when foreign banks accounted for 11% of total Russian banking capital, the latest data shows.

The West imposed unprecedented sanctions on Russia’s banking sector over Russia’s actions in Ukraine, blocking major banks from the SWIFT global payments system and limiting their ability to operate with foreign currencies.

In April, following the imposition of sanctions, VTB in Europe was no longer allowed to take instructions from parent bank VTB (VTBR.MM), Russia’s No.2 lender, and assets were cut off.

($1 = 58.0480 roubles)