The Royal Bank of Scotland Group plc RBS became the latest  foreign bank to cut Russian operations as the UK- based banking giant inked a deal to sell its subsidiary bank in Russia to Expobank LLC. The deal is expected to close in the beginning of second-quarter 2016. The transaction price remained undisclosed.

Expobank, which was sold by Barclays PLC BCS in 2011, is currently owned by private investors, with billionaire Igor Kim being a major shareholder. According to industry website Banki.ru., Expobank is currently Russia’s 93rd-largest lender with net assets of 63 billion rubles ($950 million) and  RBS in Russia holds the 145th position , with assets worth 28.5 billion rubles ($430 million).

The acquisition of the RBS unit is an advantageous deal for Expobank. Kirill Nifontov, Expobank’s CEO mentioned, “this acquisition is made in line with our bank’s strategy that focuses on both organic growth and on business development through M&A transactions. The bank's team has a lot of positive experience in acquiring and consolidating foreign financial institutions.”

The offloading of the Russian business, which RBS acquired as part of its purchase of ABN Amro in 2007 does not come as a surprise. RBS, which was bailed out with £45 billion by the British government in 2008, has been striving for growth with several restructuring initiatives that include cost reduction measures, scaling back of global operations and increasing focus on core markets, along with improving capital ratios.  

Notably, in recent times Russia has been in the focus of foreign banks to reduce presence as the country struggles with recession that has been largely driven by the Western sanctions and low oil prices. Notably, marking the third consecutive quarter of contraction, the Russian economy shrank by 4.1% from the same period last year.

Several other global banks that announced pulling back operations in Russia include Geramn banking giant Deutsche Bank AG DB, France based- BNP Paribas SA BNPQY and Austria based Raiffeisen Bank International.

Currently, RBS carries a Zacks Rank #3 (Hold).

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