PARIS (Agefi-Dow Jones)–Societe Generale announced on Monday that it has ceased its banking and insurance activities in Russia, and has reached an agreement to sell its stake in the Russian bank Rosbank as well as its Russian subsidiaries to insurance to Interros Capital.
This Russian investment fund was the previous shareholder of Rosbank. Interros is chaired and was founded by the oligarch Vladimir Potanin, who also heads the mining group Norilsk Nickel, in which he also owns almost a third of the capital. The leader and Interros are not targeted by the sanctions imposed by the United Kingdom, the European Union and the United States, but Vladimir Potanin is on the list of Russian personalities sanctioned by Canada.
“With this agreement, concluded after several weeks of intensive work, the group would withdraw in an effective and orderly manner from Russia while ensuring continuity for its employees and customers,” Societe Generale said in a press release. No sale price has been communicated by the bank.
Investors welcome the announcements of the establishment headed by Frédéric Oudéa. On the Paris Stock Exchange, Societe Generale shares rose 6.4% to 23.27 euros at 2:20 p.m., marking the strongest increase in the SBF 120.
A limited impact on the capital ratio
“The impact of the disposal of Rosbank and the insurance activities in Russia on the group’s CET1 capital ratio is expected to be around 20 basis points based on the equity value as of December 31, 2021”, underlined the French bank.
“This would mainly result from the impact of the depreciation of the net book value of the assets sold, very largely offset by, on the one hand, the deconsolidation of the local exposure to Russia”, of approximately 15.4 billion euros. euros at the end of December, “and on the other hand, a payment in favor of Societe Generale including in particular the reimbursement by the purchaser of the subordinated debt granted by Societe Generale to its subsidiary”, specified the establishment.
At the end of December, the bank’s CET 1 ratio stood at 13.7%, or 470 basis points above the minimum regulatory requirement.
KBW considers “limited” the impact of the sale of Societe Generale’s Russian activities and considers that the establishment’s announcements should constitute “a relief” for its shareholders.
“Once the impact on earnings and shares (2.7% and 4% respectively) is removed, the 27% underperformance of [l’action Société Générale] compared to the sector since the Russia / Ukraine war should, in our opinion, be partially filled”, continues KBW.
“The announcement of the exit from Russia is positive for Societe Generale shares because it clarifies the impact of the exposure” of the bank to this country, believes for its part Jefferies.
Societe Generale expects to finalize this operation “in the coming weeks”. This disposal project will lead the group to post a charge of approximately 2 billion euros to its income statement, corresponding to the net book value of the activities sold.
The distribution policy maintained
Societe Generale will also record an “exceptional non-cash item with no impact on the group’s capital ratio” of approximately 1.1 billion euros, which corresponds to “the normative recovery in the expense account of the reserve conversion”.
Despite these announcements, the bank confirmed its entire distribution policy for the 2021 financial year, i.e. a dividend of 1.65 euros per share and a share buyback program of approximately 915 million euros. .
“The absence of a profit warning” linked to the announcement of the exit from Russia “could be well taken by the market”, considers Citi in a note.
ALD, a subsidiary specializing in long-term vehicle financing of Societe Generale, has announced that its entities in Russia and Belarus will no longer conclude new commercial transactions.
-Julien Marion, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] ed: VLV
(Patricia Kowsmann, The Wall Street Journal, contributed to this article)
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April 11, 2022 08:20 ET (12:20 GMT)