UniCredit Exit From Russia Alfa Bank in Limbo Amid Sanctions
UniCredit Exit From Russia Alfa Bank in Limbo Amid Sanctions
(Bloomberg) --
UniCredit SpA is facing a delay in the long-planned sale of a stake in the owner of a Russian bank, in a sign of the complications in store for Chief Executive Officer Andrea Orcel as he considers a wholesale retreat from the country.
UniCredit in November exercised an option to sell its 10% in ABH Holdings, the owner of Alfa-Bank, expecting the deal to close by March, according to filings. But the sale may not be finalized in time after the European Union and the U.S. imposed sanctions on Alfa-Bank following Russia’s invasion of Ukraine, said people familiar with the matter.
The Milan-based lender was set to receive a net $137 million from the sale because the disposal price of about 287 million euros ($317 million) would be partly offset by liabilities. The bank said the deal won’t have any financial impact.
The hold-up underscores the challenges as UniCredit considers exiting Russia, joining a growing list of global banks exploring similar plans in the wake of the invasion. The Italian bank is among European lenders with the biggest exposures to Russia, along with Austria’s Raiffeisen Bank International AG and France’s Societe Generale SA.
“We need to seriously consider the impact and the consequences and the complexity of disentangling a full bank from the country,” Orcel said Tuesday about UniCredit’s Russia business. “No conclusions can be drawn overnight, but we will report soon with more detail.”
UniCredit is aiming to complete the ABH disposal as soon as possible, in line with rules and regulations, the people said, asking not to be identified in discussing internal information. Officials for Milan-based UniCredit and Luxembourg-incorporated ABH Holdings declined to comment.
UniCredit received the roughly 10% stake when it sold its Ukrainian unit JSCB Ukrsotsbank in 2016, in a deal that gave UniCredit the option to sell the stake back to ABH after five years. But the sanctions against Alfa-Bank as well as against several of the investors behind ABH Holdings have complicated the matter.
Russian billionaire Mikhail Fridman, who founded Alfa Bank more than two decades ago, and his business partner Petr Aven stepped down as directors of ABH earlier this month after the EU imposed sanctions on them Feb. 28. Russian billionaires German Khan and Alexey Kuzmichev -- two other Fridman associates -- ceded their stakes in the Moscow-based lender, Alfa-Bank said in a statement on Wednesday.
For now, the financial implications of the stake sale are minor. But a large-scale retreat from Russia is likely to cause much more pain. UniCredit has said that in an extreme scenario where its Russian banking assets are wiped out, it would suffer a hit of about 200 basis points to its capital buffers, or some 7.4 billion euros ($8.2 billion).
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