HSBC agrees to sell Russia footprint to Expobank, exit the country

Dive Brief:

HSBC has agreed to sell its Russia footprint to Expobank, Reuters and Bloomberg reported Thursday. Financial terms of the deal were not disclosed.
The transaction will require approval from a government commission in Russia. The country’s deputy finance minister, Alexei Moiseev, said last week Russia would block the sale of foreign banks' Russian businesses in response to Western sanctions on Russian banks abroad, according to the news agency Interfax.
Rather than instituting a blanket ban on such deals, the commission plans to review potential sales of foreign banks’ Russian footprints individually, Bloomberg reported, citing two officials familiar with the matter.

Dive Insight:

Banking Dive and other news outlets this month reported that HSBC and Expobank were in advanced discussions on a deal that would finalize the British lender’s exit from Russia.

Expobank had earlier been reported as one of three potential buyers of Citi’s Russia footprint.

HSBC counts assets of roughly $1.4 billion tied to Russia. The bank had roughly 200 employees on the eve of Russia’s Feb. 24 invasion of Ukraine, CFO Ewen Stevenson said at the time, according to Reuters.

Several foreign banks trying to exit Russia posted job vacancies in earnest this month, the wire service reported Thursday. Austria’s Raiffeisen Bank International posted 276 Russia-based openings in July, according to Russian job website Headhunter. Citi, meanwhile, posted 84.

"The vacancies that have opened are related to the fact that many employees left Russia after Feb. 24,” an unnamed source at a foreign bank in Moscow told Reuters. “They just stood up, resigned and fled on a wave of panic.”

Foreign banks accounted for 11% of Russian banking capital at the end of 2021, according to data from the country’s central bank, seen by the wire service.

HSBC said in April it would not accept new business or customers in its Russia unit. It did not, however, fully commit to withdrawing from Russia because of its responsibility to multinational corporate clients. HSBC closed its retail operations in Russia in 2011 to focus on corporate banking. It took a $250 million charge in the first quarter of this year over its connection with Russian counterparties.

“Following a strategic review, HSBC has signed an agreement to sell 100% of its participating interests in HSBC Bank (RR) LLC to Expobank JSC,” HSBC said in a statement seen by Reuters and Bloomberg.

Expobank declined to comment to Bloomberg and did not immediately respond to Reuters.

The Russian lender has a history of expanding by acquiring other companies’ footprints in the country. Expobank was Barclays’ Russia subsidiary until 2011, when Igor Kim bought it and grew the institution through acquisitions of Turkey-based Yapi Kredi and assets from what is now NatWest.