French lender SocGen to exit Russia with Rosbank stake sale

French bank Societe Generale has agreed to sell its stake in Rosbank and the Russian lender’s insurance subsidiaries to Interros Capital, a firm linked to billionaire Vladimir Potanin. The move announced addresses mounting pressure on SocGen to cut ties with Russia after its invasion of Ukraine and ends its more than 15-year investment in Rosbank.

French bank Societe Generale has agreed to sell its stake in Rosbank and the Russian lender's insurance subsidiaries to Interros Capital, a firm linked to billionaire Vladimir Potanin.

The move announced addresses mounting pressure on SocGen to cut ties with Russia after its invasion of Ukraine and ends its more than 15-year investment in Rosbank. "With this agreement (...) the group would exit in an effective and orderly manner from Russia, ensuring continuity for its employees and clients", the French bank said on Monday.

The deal, pending regulatory approval, would result in a write-off of about 2 billion euros ($2.2 billion) and an exceptional non-cash item with no impact on SocGen's capital ratio, it said. Rosbank will be transferred back to the empire of Potanin, who is the biggest shareholder in Norilsk Nickel, the world's largest producer of palladium and refined nickel

SocGen first acquired a stake in Rosbank in 2006 with an option to buy a majority holding in 2008. The Russian bank was fully merged with SocGen's other Russia operations in 2010. The Rosbank deal will dent SocGen's CET 1 capital ratio by about 20 basis points, it said, adding that the ratio would remain "comfortably above" the company's guidance.

Russia's invasion of Ukraine has triggered a barrage of financial sanctions from the United States, Europe and Britain, prompting Western companies to sell their Russian assets. SocGen, France's third-largest bank previously flagged the risk of a write-off on its Rosbank stake. ($1 = 0.9192 euros)