Russia Opens Door for Goldman Sachs’ Exit
In a significant move, Russian President Vladimir Putin has given the green light to Armenian investment fund Balchug Capital’s acquisition of Goldman Sachs’ Russian unit. This development could pave the way for the US bank to fully withdraw from the Russian market.
Tightening Grip on Foreign Asset Sales
Since the start of the conflict in Ukraine, Moscow has been steadily increasing restrictions on foreign asset sales. As a result, banks require Putin’s approval for any deal, making it challenging for them to exit the market. A source close to the matter confirmed that Goldman Sachs has entered into a binding agreement to dispose of its Russian subsidiary, subject to various conditions.
A Small but Significant Player
According to a ranking of banks maintained by banki.ru, the Goldman Sachs subsidiary is Russia’s 229th largest lender in terms of net assets. While it may not be a major player, its exit would still be a significant development in the Russian banking landscape.
Balchug Capital’s Growing Presence
Balchug Capital, led by CEO and founder David Amaryan, has been expanding its presence in Russia. Last year, the company acquired US machinery maker Caterpillar’s Russian assets. The fund did not immediately respond to a request for comment on its latest acquisition.
Western Banks Struggle to Exit
Only a handful of Western banks, including Austria’s Raiffeisen, Italy’s UniCredit, and Hungary’s OTP, are still operating in Russia nearly three years after the conflict in Ukraine began. Dutch bank ING Groep recently reached an agreement to sell its business in Russia to local company Global Development JSC, but the deal still requires regulatory approvals from the EU.
Challenges in Exiting the Russian Market
Foreign lenders face significant hurdles in leaving the Russian market. Presidential approval is no guarantee of a successful exit, as seen in the case of Italy’s Intesa Sanpaolo, which received the green light from Putin to sell its Russian assets in September 2023 but has yet to complete the sale. The bank’s CEO has stated that it has cut its overall exposure to Russia to a “negligible” level, but it remains difficult to dispose completely of its local subsidiary.
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