Citi in talks with Russian buyers over sale of local operations

Citigroup is in talks with several local buyers over a potential sale of its operations in Russia, making it the latest major foreign bank to exit the country following Vladimir Putin’s invasion of Ukraine.

The US group is in negotiations with privately owned Russian companies including Expobank and insurance company Reso-Garantia over the fate of its consumer and commercial businesses, according to people familiar with the matter.

Rosbank, Société Générale’s former Russian subsidiary, has also expressed interest in buying Citi’s operations, but its ability to complete any deal has been thrown into doubt after the UK imposed sanctions on its new owner, oligarch Vladimir Potanin, this week. He remains free of US and EU sanctions, however.

Potanin’s interest in Citi’s assets is a new development after he said previously that he was not interested in buying any more banks after acquiring a stake in fintech TCS from fellow Russian billionaire Oleg Tinkov, who said he was forced into the sale by the Kremlin after criticising the war.

Citi is also winding down its corporate banking balances and operations as quickly as it can, but is continuing to work with its multinational clients that are also exiting the country after western sanctions made it all but impossible to remain in Russia.

The US lender will probably keep its licence — although a final decision has not been made — and retain a stripped-down presence in Russia, the people said.

Citi declined to comment. Expobank, Rosbank and Reso-Garantia did not respond to a request for comment.

Citi, whose Russian bank is a top-20 lender with Rbs735bn ($13.5bn) in assets, was looking to sell its retail business before the war. It said in March it would stop taking on new clients and added in April that it would divest “significant portions” of its local business.

Expobank has experience taking over foreign banks’ Russian operations. It was Barclays’ Russian subsidiary until its current owner, Igor Kim, bought it from the UK lender in 2011, then acquired banks from RBS in 2015 and Turkey’s Yapı Kredi in 2017.

Kim said last year he would sell its European assets. Expobank has already sold its Latvian subsidiary and owns banks in the Czech Republic and Serbia.

Russian finance news site Frank RG first reported Expobank’s involvement in talks with Citi.

Reso-Garantia is one of Russia’s largest insurance companies and already owns a small bank. France’s Axa, which owns a 37 per cent stake in Reso-Garantia, withdrew its representatives to the company’s board after the war began and said it would look to “minimise” its business in Russia.

Major banks with a significant presence in Russia have all looked to exit the country since the war started and western sanctions made operating there increasingly difficult.

But where SocGen took a €3.1bn hit on selling Rosbank, a top-10 lender, to Potanin, Austria’s Raiffeisen and UniCredit are holding out for more, according to people familiar with their plans.

A senior executive at UniCredit said SocGen’s disposal was essentially a “donation” or “gift” to Potanin and that, like Citi, the Italian bank is seeking fair value for its assets in the country.