Societe Generale withdraws from Russia by cutting costs of operation – 04/11/2022 at 11:36

PARIS (Reuters) – Societe Generale on Monday announced its withdrawal from Russia with the sale of its stake in Rosbank and its insurance subsidiaries to Interros Capital, a group linked to oligarch Vladimir Potanin, a decision that was greeted by a rise in the share price.

The bank, led by Frédéric Oudéa, was one of the last major French companies, along with TotalEnergies and Auchan, to fail calls for withdrawal from the Russian market following Western sanctions over the invasion of Ukraine, but warned in the early March that it risked losing all its banking assets in Russia.

Finally, it has mitigated losses by completing the sale of its entire stake in Rosbank and its insurance subsidiaries to Interros Capital, enabling it, it explains in a press release, to “revoke effective and orderly order from Russia by providing continuity for its employees and customers”.

However, SocGen does not specify the amount of the sale.

Interros, which was already a shareholder in Rosbank before Societe Generale took a stake in Rosbank in 2006, is controlled by Vladimir Potanin, the largest shareholder in Norilsk Nickel, the world leader in palladium and refined nickel.

Vladimir Potanin is not currently the target of European sanctions, but he is one of those decided by Canada.

On the Paris stock exchange, shares of Societe Generale gained 5.92% to EUR 23.16 around 09:00 GMT, the biggest gain in the CAC 40 index, which rose 0.32% at the time.

The third French bank by capitalization specified that the impact of the sale of its Russian business on its CET1 solvency ratio should be approximately 20 basis points, based on its asset value as of December 31, 2021.

The group would have to record exceptional charges of approximately EUR 3.1 billion in its accounts, including the depreciation of the sold activities. On the other hand, it will be able to deconsolidate its exposure to the Russian market, valued at 15.4 billion euros.

Societe Generale also confirms its full distribution policy for the 2021 financial year, namely a dividend of EUR 1.65 per share and a share buyback program of approximately EUR 915 million.

Several analysts point out that the impact of this pullout is less severe than expected for the French bank, recalling that SocGen had stated a potential impact of 50 basis points on its solvency ratio.

For its part, KBW believes that after Monday’s announcements, “the 27% underperformance (of Societe Generale shares) compared to the sector as a whole since the beginning of the war between Russia and Ukraine should be partially overcome”.

(Written by Myriam Rivet and Marc Angrand, edited by Bertrand Boucey)

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