Dive Brief:
- Russian President Vladimir Putin has permitted Goldman Sachs to sell its Russia business, nearly three years after the bank committed to shuttering operations in the country.
- Armenian investment firm Balchug Capital has been approved to buy the unit for an undisclosed sum, according to a decree Putin signed.
- A Goldman spokesperson declined to comment. Sources inside the bank confirmed the firm had entered into a binding agreement to dispose of its Russian subsidiary, subject to various conditions.
Dive Insight:
Goldman, which has had a Russia presence since 1998, was the first major Wall Street bank to pledge to close its operations in Russia after the country invaded Ukraine in February 2022.
But actually exiting Russia has been more difficult for banks than simply pledging to leave: The New York City-based investment bank is one of a number of foreign-owned banks that was prohibited from selling shares without Putin’s approval.
After the Ukraine invasion, attention toward U.S. banks was mostly directed at Citi, which had the largest total exposure to Russia of any large U.S. bank. Citi developed a plan to exit retail banking in Russia relatively quickly. Even so, Citi still has $9 billion tied to Russia, Bloomberg reported Friday.
In the past two years, Balchug Capital has closed at least three deals to purchase Western businesses pulling out of Russia, the Financial Times reported. The firm was founded in 2010; CEO and founder David Amaryan previously worked at AllianceBernstein, Citi and Russian investment bank Troika Dialog, according to Bloomberg.
“We have worked closely with all the relevant authorities to ensure that this transaction is in full compliance with all local and international laws and sanction regulations,” Amaryan said in a statement, seen by Bloomberg. “The bank will play a key role in our portfolio.”
Armenian firms have become common middlemen between Russian and Western markets, given international sanctions imposed following Russia’s invasion of Ukraine and Russia viewing Armenia as friendlier than Western countries, according to the publication.
Dutch bank ING last week said it was selling its Russia business to local company Global Development JSC, paving the way for its exit from the country, Reuters reported. Terms of the deal weren’t disclosed, but the sale resulted in a $726 million hit. The sale still needs approval from European Union regulators, Reuters reported.
Austrian lender Raiffeisen says it has been trying to navigate an exit from Russia for the past three years; Bloomberg reported the bank, which is profiting from companies providing Putin’s military with supplies, is essentially trapped in the country.
