The Central Bank did not approve the transfer of "subsidiaries" of foreign banks under external management

There is no good reason to take over the management of subsidiaries of foreign banks, says Elvira Nabiullina, HEAD of the Bank of RUSSIA.This approach has so far been applied to the energy assets of Finnish Fortum and German Uniper.

The transfer of Russian "daughters" of foreign banks under the external management of other credit institutions is not advisable, the head of the Central Bank, Elvira Nabiullina, said at a press conference. This is how she commented on the approach of the Ministry of Finance in relation to the assets of foreign companies that could not sell their structures in Russia: on April 27, Deputy Finance Minister Alexei Moiseev said that Russian business, which had suffered from the actions of unfriendly countries, would actually manage such assets.

“As for the possibility of transferring Russian assets to management instead of allowing foreign owners to leave, these decisions should be made with very good reasons related to the stability of the functioning of the Russian economy. In the banking sector, we do not consider this to be appropriate,” Nabiullina said.

How taking over control in foreign companies became an alternative to selling

On April 25, President Vladimir Putin signed a decree that allows for the introduction of external management of Russian assets by foreign investors in response to the "unfriendly actions" of the United States and other states that "joined them." Such measures were taken in connection with the "illegal expropriation of Russian assets abroad," said presidential spokesman Dmitry Peskov. After the start of a special military operation in Ukraine, the United States, the European Union, Great Britain and other Western countries imposed sanctions on the gold and foreign exchange reserves of the Central Bank, and also introduced external management in the subsidiaries of Russian banks in Europe and the United Kingdom.

So far, only two energy assets have been included in the presidential decree - the German state company Uniper (87.73% stake in the Russian company Unipro) and the Finnish state company Fortum (two stakes of 69.88 and 28.35% of the Russian Fortum, which are owned by Fortum Russia and Fortum Holding respectively). The Federal Property Management Agency became their interim manager, but the Ministry of Finance admitted that de facto operational management would be carried out by domestic business, which had suffered from the actions of unfriendly countries.

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“The design of the presidential decree is such that, in fact, management will be carried out by a company that has suffered from unfriendly countries,” Moiseev commented on the situation with Unipro and Fortum. He recalled that the newly appointed management of the companies consists of people from Rosneft. “That is, whoever has suffered is the one who manages,” the Deputy Minister of Finance summed up.

How does this affect the subsidiaries of foreign banks

After the start of a special military operation, many foreign banks announced that they were curtailing their business in Russia, not excluding the sale of these assets. However, few managed to realize such transactions: at first, the sale was possible only with the permission of the profile commission under the government, and in August 2022 a decree was issued banning such transactions without special permission from the president. The restrictions apply to 45 banks with foreign participation, including systemically important Unicredit and Raiffeisenbank. The latter is trying to curtail business in Russia as quickly as possible.

At the same time, some bankers supported the idea of ​​seizing control in the "daughters" of foreign players. On April 24, in an interview with the Russia 24 TV channel, VTB head Andrey Kostin called this approach fair.

“What have they done to us? We had several Western banks - let's take Germany, we had a very good reliable bank. We were told that we no longer have the right to manage, put the administration, which was appointed by the German supervisory authority, the administration voted for the liquidation of the bank. What does it mean? That the assets will be sold, if there is something else left, it will be frozen until the end of the sanctions. We are told that nothing can be expropriated. But it’s not necessary - it’s necessary to do it absolutely mirror image, ”he said, referring to the situation with VTB Bank Europe SE. As an example of a response, Kostin cited the takeover of Fortum's asset management in Russia.