HSBC Transfers Ownership of Russian Unit to Expobank
Following nearly two years of negotiations and uncertainty, HSBC has finalized the transfer of ownership of its Russian unit to Expobank for an undisclosed amount.
Background
HSBC’s exit from the Russian market has been anticipated since February when Russian President Vladimir Putin approved the asset sale to privately owned Expobank. The transaction signals the end of HSBC’s participation in Russia, which was first announced in June 2022 when the bank agreed to sell a 100 per cent interest in HSBC Bank (RR) LLC to Expobank.
Transaction Details
“Economic ownership of HSBC Russia has been transferred to Expobank,” HSBC announced in a statement. “The transaction will formally complete once the legal title transfer has been registered in the State Corporate Register.”
Expobank announced the successful transaction, stressing that the unit will continue to function under a new, yet-to-be-disclosed name.
Market Dynamics
Despite persistent sanctions, European banks have been under increased pressure to divest from Russia. Foreign banks face a particularly difficult regulatory landscape following a 2022 decree prohibiting investors from “unfriendly” countries from selling shares in key energy projects and banks without presidential approval.
Raiffeisen Bank International from Austria remains Russia’s largest European lender, followed by UniCredit from Italy. Intesa Sanpaolo, another big Italian bank, has been preparing to quit the Russian market and received Putin’s approval in September 2023.
Impact on HSBC and Expobank
In September 2023, HSBC announced it would stop making commercial payments to and from Russia and Belarus, citing the growing difficulty of operating under the sanctions system. HSBC’s Russian unit generated about $15 million in revenue before the conflict in Ukraine, a small portion of the bank’s total revenue of more than $50 billion.
Regulatory Environment
The US sanctioned Expobank in December as part of a broader package of penalties aimed at Moscow’s energy and banking sectors in response to Russia’s military activities in Ukraine in February 2022.
Conclusion
As HSBC closes its business in Russia, the bank has drastically decreased the size of its Russian unit, aligning with international sanctions and regulations.
