On Monday the group announced that it will cease its banking and insurance activities in Russia through its subsidiary Rosbank. The French bank will sell its entire stake in Rosbank and all of its insurance subsidiaries in Russia to Interros Capital.
According to the group, this agreement was reached after several weeks of discussions. Russian news agency Tass reports that the terms of the transaction relating to the acquisition of Rosbank by Interros Capital have been approved by the Russian government commission in charge of monitoring foreign investments.
The transaction should be finalised in the coming weeks, after all necessary regulatory approvals have been obtained, state dSociété Générale.
Past controversy
After taking a minority stake in Rosbank in 2006, Société Générale became the majority shareholder in 2008. Since then, the banking group has faced criticism on several occasions regarding its presence in Russia, for example after the arrest of Rosbank's boss that same year in connection with allegations of bribery. Although the charges were dropped three years later, Société Générale faced further criticism in 2014 in the wake of Russia's annexation of Crimea.
When the Russian army invaded Ukraine on 24 February, the French group explained that its subsidiary Rosbank was continuing to operate as normal, while at the time markets feared the impact of new Western sanctions against the Kremlin.
In January, just under a month before the outbreak of war, the international financial press reported that the European Central Bank (ECB) had approached several European systemic banks to enquire about their exposure to Russia, including Société Générale which has a network of 230 branches in the country.
The banking group's net banking income (NBI) from Russia in 2021 amounted to €727m, of which €643m were stemming from Rosbank. This sum represented 2.8% of the French banking group's NBI in 2021. The group's net result from its Russian activities reached €152m in 2021, or 2.7% of the total.
Plans thwarted on the local market
The sale of Société Générale's holdings in Rosbank to Interros Capital comes as a surprise after in November 2021, the French group established a new roadmap for Rosbank. This defined as an objective for the Russian bank reaching the position of a leader in sustainable development on the local market by 2025. Rosbank's director, Ilya Polyakov, stated that Rosbank's goal was “to become the best international bank in Russia by 2025”.
At the beginning of March, Société Général tried to reassure the markets about the risk of its subsidiary Rosbank being expropriated by the Russian government. An expropriation would have caused the group to suffer a loss of €1.8bn in terms of equity and would have affected its 12,000 employees in Russia.
Interros Capital is part of the Interros Group, a Russian investment company founded in 1990 by Vladimir Potanin. Forbes magazine estimates Potanin's fortune at $26.4bn through investments in the nickel industry. He also served as deputy prime minister during the presidency of Boris Yeltsin and maintained links with Vladimir Putin, including through financial and organisational support for the regime. On 6 April, Canada placed Vladimir Potanin on its list of Russian individuals subjected to sanctions.
In December 2021, a press release from Interros Group informed that the investment company had moved its offshore company Interros Capital from Cyprus to the special administrative region on Russky Island in the Sea of Japan.
This story was first published in French on . It has been translated and edited for Delano.