The transaction is part of the company’s efforts to reduce its exposure to Russia and follows its decision to wind down its consumer and local commercial banking businesses in the country, as announced in August this year
Citi to divest instalment loan portfolio in Russia. (Credit: Rubaitul Azad on Unsplash)
Citi announced that its Russian subsidiary AO Citibank has agreed to sell its portfolio of personal instalment loans to Russian commercial bank Uralsib.
The bank has also agreed to transfer a portfolio of Russian credit card balances to Uralsib, subject to customer consent.
The move is part of the US lender’s efforts to withdraw its operations, and reduce its exposure to Russia, reported Reuters.
It follows the company’s decision to wind down its consumer and local commercial banking businesses in the country, as announced in August this year.
Earlier this month, Citi announced its plans to close almost all of its institutional banking services in Russia by the end of the first quarter of 2023.
The current agreement does not include any transfer of employees or branches, and Skadden, Arps, Slate, Meagher & Flom served as legal advisor, said Citi.
Russian Central Bank Governor Elvira Nabiullina told in a media briefing: “The ban covers only dealings with shareholder capital. She added that criteria for allowing such dealings are yet to be established.
“Until such criteria are established, work is underway on the decree. The whole set of factors will be considered. And as for the ability to sell assets, the decree applies only to transactions with shares.”
Uralsib is a privately-owned commercial bank, based in Moscow, Russia, with a net asset value of around RUB530bn ($8.6bn).
The bank said that Citi’s loan portfolio has a credit quality that is significantly higher than the market average, reported Reuters.
Also, the addition will help increase its client base in Moscow and St Petersburg.
The transaction is seen as important, as Russia has recently banned dealings with the shareholder of 45 banks, predominantly business units of Western and Asian lenders.
The list includes Russian units of Intesa, Credit Suisse, OTP bank, UniCredit, Russian Yandex-Bank, Ozon-Bank, Raiffeisen and Citi.