Raiffeisenbank and UniCredit have decided on plans to leave Russia
Source：Vedomosti
From：Taiwan Trade Center, Moscow
Update Time：2024/09/07
UniCredit bank intends to significantly reduce its business in Russia by the end of the year, in particular, to reduce the volume of loans and deposits, as well as cross-border payments, follows from the group's presentation on the results of the first half of 2024.
According to UniCredit's plan for 2025, international payments should be less than 8.5 billion euros, loans minus reserves – less than 1 billion euros, and deposits – less than 2 billion euros. At the same time, cross-border risks to Russia should be reduced to almost zero.
Like Raiffeisenbank, Unicredit Bank is under the close supervision of the European regulator. On April 19, Reuters, citing two sources familiar with the situation, reported that the ECB is ready to demand that the Italian bank UniCredit reduce its business in Russia. The group itself refused to say whether they had received an order from the European regulator. But on July 1, Bloomberg reported that UniCredit had appealed to the European Union's highest court of general jurisdiction for clarification on the ECB's demands to reduce its presence in Russia.
At the end of April, Unicredit Bank warned its clients – legal entities about an increase in the terms of international transfers on the part of foreign correspondent banks and their possible refund without execution. In addition, there is a risk of a refund by a foreign correspondent bank without execution.
On May 7, the group's chief financial officer Stefano Porro announced that UniCredit intends to almost completely eliminate its cross-border risks to Russia by the end of 2025. According to him, since March 2022, this figure has already decreased by 91%, or 5.6 billion euros (577 billion rubles). Porro also noted at the time that UniCredit controls the volume of business in Russia, protects itself from sanctions and complies with all requirements.
The net profit of the Italian group's Russian business in the second quarter of 2024 reached 116 million euros, which is 33% less than in the same period last year, according to the group's financial statements. But for the Italian group, this part of the business accounts for only 4.33% of earnings. The net interest income of Russian Unicredit increased by 3% year–on-year to 201 million euros, and commission income - by 4% to 58 million euros. Operating income increased by 32% over the year and amounted to 340 million euros.
Impact on the sector
The plans of RBI and UniCredit can be described as voluntary self-restraint, adopted under pressure from regulators in different countries, says Ivan Uklein, Senior Director for Banking Ratings at Expert RA: a phased curtailment of business activity of subsidiaries of foreign financial groups in Russia was observed during 2022 – the first half of 2024. And given the current size of both banks, their complete withdrawal from the market may take more than a year or even two, adds Anastasia Terekhina, partner at the FBK audit and consulting company. At the same time, the gradual winding down of the business will not particularly affect the financial condition of RBI and UniCredit, she is sure.
Raiffeisenbank and Unicredit Bank are included in the list of systemically important credit institutions along with 11 other banks, Terekhina recalls. And these 13 banks account for more than 75% of the total assets of the Russian banking sector, so the stability of the banking system depends on the financial condition of each of these financial structures, she notes. But with a gradual reduction in business, the consequences will only be the consolidation of the other 11 systemically important credit institutions and an even greater concentration of the banking sector on several players, Terekhina is sure.
Olga Naidenova, senior analyst at Sinara Investment Bank, agrees with her: from the point of view of the Russian banking system, reducing the balance sheets and volumes of the credit and deposit business of these banks is not a big problem, since Russian financial institutions will replace them in this part of the business.
At the same time, another issue remains problematic – the payment infrastructure, Naydenova notes. A very limited number of banks have the ability to make cross-border payments, especially in unfriendly currencies, so a decrease in volumes for this indicator will certainly become a problem, she states.
Source: https://www.vedomosti.ru/finance/articles/2024/07/31/1052976-raiffeisenbank-i-unicredit-opredelilis-s-planami-uhoda-iz-rossii