A Kremlin decree prevents countries considered hostile, including Italy, from selling stakes in the energy and banking sectors until the end of the year. It is a response, signed by Vladimir Putin, to the sanctions that have arrived from the EU, the UK and the United States.
According to MF-DJ, the new decree signed in Moscow does not only concern credit institutions, but also the energy sector. From the Russian point of view, the American giant ExxonMobil would have been targeted above all, which was pursuing the exit from the expensive Shakalin-1 project together with Rosneft which would have remained with the match in hand by losing the operator of the field to which they contribute , but with minor roles, also Japanese and Indian. The list of frozen groups and assets should be defined and made known quickly with the contribution of the governor of the Russian Central Bank Nabiulina.
Stop the sale of bank assets, Putin's decree
In the meantime, some considerations can be made. Indeed, the exit strategy of Western banks remains a priority objective, but the modalities are not the same for everyone. The first to come out was Société Générale which, immediately after the outbreak of war in Ukraine. The French group sold its entire stake in Rosbank and its insurance subsidiaries to Interros Capital, cashing in a loss of more than three billion. Others – among them Unicredit and even more Intesa Sanpaolo, they preferred to wait and evaluate the events. The American Citi, after divesting its consumer banking business in Russia, has decided to keep its banking licence.
The first half proved to be less catastrophic than expected for the banks. The ruble rallied after the post-Ukraine invasion slide and left room for positive credit gains. Among the record profits that Unicredit reported in the second quarter of the year, about 400 million are attributable to the performance of the Russian currency. Citi on the one hand it reduced assets by 3,1 billion dollars, but on the other hand it saw the value of the assets still on the balance sheet rise by 3,6 billion, with a capital gain of 500 million. Raiffeisen it cut its exposure to Moscow by 22% but saw assets grow by €3,1 billion as the ruble strengthened by 40% against the dollar and the euro in the second quarter of the year. All this has contributed to lengthen the exit times from the Russian market.
To avoid collecting a deadweight loss, prudence guided many banks, including Unicredit and Intesa. “Our exposure to Russia is under control and Russia is no longer a concern for the group's results. We are reducing our exposure as we have committed ourselves, our business in Russia is functional - CEO Andrea Orcel underlined at the end of July when presenting the quarterly accounts that went beyond expectations - and from an economic, financial and capital point of view Russia's impact on accounts is no longer a concern for us. We are committed to gradually reducing our exposure: we have reduced it by 2,7 billion and will continue to do so in an orderly and rational manner. We have not changed our position in this regard." However, the stop decreed by the Kremlin until the end of the year could create some headaches or in any case slow down the bank's plans. According to MF-DJ, the group is considering a temporary exit from the Russian market with the possibility of repossessing the assets at the end of the current geopolitical crisis. The transaction could be structured as a swap or repo that swaps assets with unsanctioned counterparties to offset risk over a period of anywhere from a few months to a year. Intesa Sanpaolo, on the other hand, continues to explore various options, although it has not made any definitive decisions.
Stop the sale of Enel's assets in Russia until December 2022
The decree signed by Putin – according to reports the Tass agency reporting an indiscretion from the Russian newspaper Kommersant – it also concerns the Italian Enel and the Finnish Fortum which could escape the restrictions only thanks to a specific authorization from the head of state.
The sale of 56,43% in Pjsc Enel Russia would have reduced Enel's debt by around 550 million
On June 16, Enel signed the agreements for the sale of assets in Russia consisting of the entire 56,43% stake in Pjsc Enel Russia for approximately 137 million euros in Lukoil and the Gazprombank-Frezia- fund. The transaction would have generated a positive impact on debt of approximately €550 million and a negative impact of approximately €1,3 billion on reported net income mainly due to the release of the foreign exchange translation reserve, for approximately €1,1 billion as at 31 May, Enel specified in presenting the transaction. An accounting effect "which will have no impact on ordinary economic results", assured the energy giant.
The closing was expected within the third quarter of 2022
In the conference call on the half-yearly report, CEO Francesco Starace said that "Enel's exit from Russia is in the final stages" and that the closing of the transaction is expected "by the third quarter of 2022". But if the rumors are confirmed, the sale of Enel Russia risks ending up frozen until the end of the year. For Equita Sim it is a small operation for Enel which would only be blocked in the second half of this year. Equita therefore confirmed the buy rating and the target price of 7,5 euros on Enel shares, which are currently trading on the verge of 5 euros at 5,006 euros (-0,52%).
