Dutch bank ING has agreed to sell its Russian business to Moscow-based Global Development JSC. The sale includes all of ING’s operations and assets in Russia. The transaction details, including the sale price, have not been disclosed.
However, ING anticipates a negative profit and loss impact of around €0.7 billion post-tax. This includes an estimated book loss of around €0.4 billion, representing the difference between the sale price and the business’s book value. This would impact ING’s Common Equity Tier 1 ratio by about five basis points.
Additionally, there will be an estimated negative impact of approximately €0.3 billion from recycling the currency translation adjustment through profit and loss. This will not affect the CET1 ratio and net profit. An ING spokesperson stated, “This sale allows us to reduce our footprint in a market that has become increasingly challenging due to political and economic factors.
Ing reduces footprint in Russia
We believe this is in the best interest of our shareholders and clients.”
The sale is subject to regulatory approval and is expected to be finalized by the end of the year. Upon completion of the acquisition, Global Development intends to continue serving customers in Russia under a new brand.
ING will continue to reduce its offshore exposure to Russian clients after the transaction. As of September 30, 2024, this exposure, booked by other ING entities outside Russia, amounted to €1 billion. €0.5 billion is covered under Export Credit Agency or Credit and Political Risk Insurance.
ING joins several Western financial institutions, reevaluating their presence in Russia amidst ongoing geopolitical and economic challenges. Unlike ING, some banks, including Raiffeisen and UniCredit, continue to operate in the region. Analysts have pointed out that this move reflects a broader trend among Western companies reassessing their positions in Russia due to ongoing sanctions and geopolitical risks.
The financial sector is closely watching this development, which may signal further consolidations and exits by other European banks from the Russian market.