Italian Banks Must Leave Russia

STRESS – Bank- bank Italia had to stop their business in Russia because, hang in there according to the Governor Bank Sentral Italian Fabio Panetta, will damage reputation. This was conveyed by policy makers at the Italian Central Bank, on Saturday, yesterday.

After Austria’s Raiffeisen Bank International, UniCredit is the European bank with the largest exposure to Russia, while Intesa Sanpaolo is seeking to offload its business in the country.

“From there (Russia) you have to get out,” Panetta told reporters at a news conference after the end of the G7 financial meeting in Stresa, northern Italy.

“Objectively, there are difficulties you have to face when leaving Russia and they are complicated. You have to find buyers who know that you are being forced, it can be expensive, but you have to get out because it will affect your reputation,” added Italian Central Bank Governor Fabio Panetta.

For information, as reported by Reuters, UniCredit’s Russian branch this month faced the confiscation of assets worth 463 million euros (or the equivalent of USD 502.12 million) in connection with a canceled gas project for which the banking group had provided a guarantee.

Meanwhile Intesa and UniCredit have both repeatedly said Western sanctions have shrunk the pool of potential buyers, making it increasingly difficult to leave. Intesa last year obtained the presidential decree necessary for the foreign bank to dispose of its business in Russia.

However, Italy’s biggest lender still has to complete its exit process, pending the green light from Russia’s central bank and Italian authorities.

UniCredit CEO Andrea Orcel has always said the bank’s goal is to reduce exposure to Russia while minimizing the blow to lenders. Orcel said it would not be “morally right… to remove and reward” units in Russia.

Both European banking watchdogs and US authorities tasked with enforcing sanctions continue to closely monitor Western banks’ activities in Russia and progress in their plans to exit Moscow. This was conveyed by a source close to the matter.

Apart from the necessary green light from Russian President Vladimir Putin and Russia’s central bank, any transactions must be cleared by the ECB.

To avoid the risk of sanctions after the deal, the US Treasury Department’s Office of Foreign Assets Control would also have to provide a letter after being notified of the potential buyer’s identity, the sources said.

(acres)