From Hi-tech to oil, from insurance to banks, the retreat of the European giants from Russia continues. From hour to hour the announcements of large groups that have decided to sell their activities or that they are making it known that they intend to leave Moscow as soon as possible, despite the possible repercussions on balance sheets and shares, are multiplying.
The first in order of time to announce the escape from Russia was the French Société Générale, followed yesterday by the German Siemens and from the British shell. They could follow suit too Allianz, Axa, Zurich and Unicredit. A real diaspora that the Kremlin is trying to arrest with threats, promising sanctions and prosecutions against foreign companies that choose to leave.
Siemens farewell to Russia
On Thursday, May 12, the German giant Siemens announced that will abandon the Russian market because of the war in Ukraine. A far from painless choice that will weigh 600 million on the accounts for the second quarter. The company's CEO, Roland Busch, described the war in Ukraine as a "turning point in history" which the company immediately condemned "clearly and forcefully". “We are all affected by war as human beings. AND financial data must take a back seat in the face of tragedy. However, like many other companies, we are feeling the impact on our business,” Busch said.
As for the costs, as he explains Reuters, in the second quarter Siemens had to support 600 million euros of write-downs and other charges, mostly registered in the rail mobility sector following the sanctions against Russia. The CEO said the company expects further impacts, mainly due to non-monetary charges related to the liquidation of legal entities, the revaluation of financial assets and restructuring costs. “At the moment we expect additional potential risks to net income in the order of hundreds of millions, even if we are not able to define an exact time frame,” he added.
Shell sells downstream business to Lukoil
In early March, Shell announced it was withdrawing from all Russian hydrocarbon projects. Two months have passed and the company has made it known that it has taken a first, important step in this direction. The British company has indeed achieved a agreement with Lukoil, the Moscow oil giant, for the divestment of its Russian retail and lubricants businesses, including 411 retail stations distributed between central and northwestern Russia and the Torzhok lubricant blending plant, approximately 200 kilometers northwest of Moscow. The financial details of the operation have not been disclosed, but Shell has announced that the operation, subject to the green light of the competent authorities, should be completed within the end of the year. "Under this agreement, more than 350 people currently employed by Shell Neft will be transferred to the new owner," said Huibert Vigeveno, Shell Downstream Director.
The agreement between Société Générale and the oligarch Potanin
SocGen was the first Western bank to announce it was leaving Russia. The French banking giant has divested its banking and insurance business in Russia to Interros Capital, an investment fund founded by oligarch Vladimir Potanin, one of the few close to President Putin who has not been affected by Western sanctions. In detail, the French group has given way the entire stake in Rosbank and the insurance subsidiary with a negative impact on capital of 20 basis points and a write-off of 2 billion.
The insurance giants ready to leave Russia
Among the companies that have had to deal with the costs deriving from the suspension of operations in Russia or their withdrawal, there are many giants of the old continent, distributed in different sectors: from beer producers Anheuser-Busch InBev e Carlsberg, to Adidas, via the automotive giant Renault.
On May 12, the CEO of Allianz, Giulio Terzariol left no doubts about the company's intentions: "The probability of our exit from the Russian market is very high", he declared during the presentation of the first quarter accounts.
Similar statements were also made by Axa, according to which “net underwriting losses due to the crisis” triggered by the conflict in Ukraine “will be similar to a medium-sized natural catastrophe event”, and by Zurich. Regarding Generali, at the beginning of March the Leone company decided to close their representative office in the Russian capital and to withdraw its representatives from the board of directors of Ingosstrakh, one of the largest insurance companies in the country.
Unicredit towards the sale of its subsidiary
According to rumors, Unicredit will soon leave Russia, which it allegedly started up preliminary negotiations to sell its subsidiary Unicredit Bank, which holds just over 1% of the Russian market. Based on what he writes Bloomberg, the institute led by Andrea Orcel would have been contacted by potential buyers interested in the operation. There is talk of financial institutions and companies interested in obtaining a banking license within Russia. However, the sale could be just one of the options on the table of the top management in Piazza Gae Aulenti who would be willing in any case to value the investment, also on the strength of the sharply rising accounts recorded by the subsidiary in the first quarter of 2022 and considering the heavy write-downs suffered by the division following what has happened in recent months.
Also a reference to Understanding, which in the first quarter announced a net profit of 1,02 billion euros (-32,5% but higher than analysts' expectations) which discounts value adjustments of 800 million euros on activities in Russia and Ukraine. During the conference call with analysts, the CEO Carlo Messina made it known that "exposure to Russia has been reduced by approximately 200 million since the beginning of the conflict without new financing or investments". Messina then explained that "the exposure to Russia is limited to around 1% of loans to the group's customers", that local loans to Russian customers are less than 0,2% of total loans to customers and the Territorial presence in Russia is limited and equal to about 25 branches. In the meantime, the bank has activated an emergency unit and created two task forces, with power of direction and monitoring, to address immediate priorities. Last March, the manager had announced that “Our presence in Russia is subject to strategic assessments".
