UniCredit signs non-binding agreement to divest part of its activities in Russia, refocusing its operations mainly around international payments
UniCredit today announces the signing of a non-binding agreement term-sheet for the sale of part of its Russian subsidiary (“AO Bank”).
The Buyer is a well-established private investor in the United Arab Emirates with long standing ties to the local institutional and business community, in respect of which UniCredit performed the applicable compliance checks.
The parties will cooperate to finalise the transaction structure, related arrangements, and communication to the market in due course.
The agreement accelerates UniCredit’s refocusing of its operations in Russia mainly around international payments primarily in Euros and USD for Western and Russian non-sanctioned corporate clients.
The transition has been structured and shall be executed to ensure continuity and stability for clients and employees. Customers utilizing UniCredit’s payment solutions to and from Russia will maintain access to the current set of operations throughout the process.
Employees of AO Bank will benefit from the accelerated transition leading to two banks with clear strategies and objectives.
The transaction envisages the spin-off of part of the activities of AO Bank into a new separate entity (the “New Bank”) followed by the sale of AO Bank with its remaining activities (the “Remaining Bank”) to the Buyer. Upon completion of the transaction, UniCredit will own 100% of the New Bank and the Buyer 100% of the Remaining Bank.
The transaction is expected to have an overall capital benefit of around 35 basis points: a negative impact of c.20 to 25 basis points by closing more than offset by the reduction of the residual extreme loss to c.30 to 40 basis points from c.93 basis points, as of 1Q26 and excluding regulatory thresholds.
The transaction is also expected to generate a cumulative negative P&L impact of c. €3.0 to 3.3 billion which includes, inter alia, a negative €1.6 to 1.8 billion from existing FX reserve flowing through P&L (non-cash item with no capital impact).
The transaction closing is expected in the first half of 2027 and is subject to the signing of binding documentation, implementation of the spin-off and approvals of the relevant regulatory authorities.
The transaction will not affect shareholder distribution as its impact will be excluded from net profit definition for distribution purposes.
The transaction will not affect UniCredit Unlimited 2028 – 2030 net profit ambitions as any headwinds incremental to what is already embedded in our assumptions will be compensated.
Update on Crédit Agricole S.A.’s financial situation in Ukraine and Russia
In the current situation, of war in Ukraine and crisis with Russia, Crédit Agricole Group wishes to be transparent regarding its exposure to these two countries. The activities of the Group in Ukraine and Russia are locally operated through two 100% owned subsidiaries: the international retail bank Crédit Agricole Ukraine and the subsidiary of Crédit Agricole CIB in Russia, CACIB AO. In 2021, the activities of CA Ukraine and Crédit Agricole CIB AO represented the following contributions:
Country Net banking income excluding intragroup eliminations (in millions of euros) Average headcount (in FTE) Earnings before tax (in millions of euros) Ukraine 125 2,286 58 Russia 22 168 5
The total exposure (on-shore and off-shore) of Crédit Agricole S.A. in these two countries represents approximately 0.6% of the total commercial lending portfolio as of 31 December 2021.
Ukraine: The commercial lending commitments1 for Ukraine amount to eq. €1.5 billion as of 31 December 2021, i.e. approximately 0.15% of Crédit Agricole S.A.’s commercial lending portfolio. They are almost all booked at the Crédit Agricole Ukraine level and are locally financed. As of 31 December 2021, Crédit Agricole Ukraine is a provider of short term liquidity to Crédit Agricole S.A. The own funds of Credit Agricole Ukraine amount to €226 million as of 31 December 20212.
Russia: The commercial lending commitments3 for Russia as of 31 December 2021 amount to approximately 0.45% of Crédit Agricole S.A.’s commercial lending portfolio4.
The exposures booked in CACIB AO subsidiary represent eq. of €540 million as of 31 of December 2021. All of the credit portfolio is locally refinanced. The own funds of the subsidiary amount to approximately €150 million, of which €80 million in equity and €70 million in subordinated debt. The bulk of assets consists in loans to local corporates, mainly in rubles, 1/3 of which benefits from the parent multinational company’s guarantee5 and of a sovereign exposure corresponding to the excess liquidity of the subsidiary deposited short term at the Central Bank of Russia in the context of its regulatory liquidity and ratio requirements.
The exposures booked outside of CACIB AO, so-called off-shore exposures, can be split into on-balance sheet and off-balance sheet.
– The on-balance share of off-shore exposures amounts to eq. of €2.9 billion6 as of 31 December 2021. This portfolio mainly pertains to fifteen large Russian corporates, notably producers and exporters of commodities, leaders on the market in key economic sectors of their country. The sectorial break down is the following: 52% heavy industry (mining, steel, fertilizers), 36% energy (oil and gas), 6% other transports, 4% shipping, and 2% aerospace. Its quality is strong: 96% of the portfolio is rated investment grade in the internal rating scale as of end December 2021. It is mainly corporate finance for 62%, trade finance for 25% and the rest corresponds to asset financing (aerospace, project, shipping). The portfolio is 56% in USD, 38% in EUR, and 6% in CHF.
– The off-balance sheet share of off-shore exposures amounts to around €1.5 billion as of 31 December 2021. It is mainly corresponding to short-term trade finance activities (in particular documentary credit and financial guarantees), and, to a lesser extent, to confirmed un-drawn credit facilities.
The variation risk linked to derivative transactions is limited and amounts to €60 million as of 31 December 2021.
Finally, there has been no new financing granted to Russia counterparties since the beginning of the conflict.
All in, these exposures, which are of a limited size and of good quality, are under a close monitoring.
The evaluation of the situation has no consequences upon the distribution of the 2021 Credit Agricole S.A dividend that will be submitted to the Shareholders Meeting of 24 March 2022. As a reminder, Credit Agricole Group’s solvency ratio amounts to 17.5% and that of Crédit Agricole S.A. amounts to 11.9% as of 31 December 2021 (CET1 capital levels respectively amount to €102.7 billion and €44.9 billion).
1 On and off-balance sheet, excluding sovereign debt exposure on the balance sheet of Crédit Agricole Ukraine, which amounts to €0.3 billion as of 31 December 2021.
2 Out of which eq. of €201 million of equity and eq. of €25 million of subordinated debt, proforma of the dividend distribution amounting to €16 million and paid on 23 February 2022.
3 On and off-balance sheet, no exposure to Russia sovereign debt as of 31 December 2021
4 Excluding Indosuez Wealth Management Russian exposures, that currently represent around €250 million.
5 Covering political Russian risk
6 Drawn share of the credit facilities, net of Export Credit Agency guarantees, excluding variation risk
Gazprom Neft has completed construction of Russia’s first LNG bunkering vessel
Construction of Russia’s first ever bunkering vessel – for natural gas (LNG) refuelling of cargo and passenger ships – is now complete: the final stage of building the Dmitry Mendeleev having involved testing of gas and cryogenic (freezing) equipment, loading systems, and LNG storage and offloading pumps and compressors. The vessel will shortly begin its maiden voyage towards its fixed berthing in the Baltic Sea.
This bunkering vessel, named after the great Russian chemist Dmitry Mendeleev, will provide ship-to-ship LNG transportation and refuelling at ports throughout the Gulf of Finland and the Baltic Sea – including St Petersburg, Ust-Luga, Primorsk, Kaliningrad and Vyborg.
Anatoly Cherner, Deputy Chairman of the Management Board, Gazprom Neft:
“LNG is going to play a key role in the decarbonisation of maritime transport, in the medium term. Thanks to its high environmental and performance features, LNG is set to take a significant market share in sales of marine fuels in international shipping. In successfully implementing Russia’s first project to build an LNG bunkering vessel, Gazprom Neft has, effectively, created a new market sector for the country – in marine gas motor fuel – from scratch. This year will see us starting commercial LNG operations in the Baltic region.”
The vessel is 100 metres in length, 19 metres wide, and can transport up to 5,800 m3 of liquid natural gas. Its Arc4 ice-class reinforced hull means it can navigate one-year-old ice (of up to 80 cm thick). The latest shipbuilding and LNG transportation technologies have been utilised on the Dmitry Mendeleev project, in line with the most recent environmental standards governing maritime transport and LNG refuelling processes. The Dmitry Mendeleev is also environmentally friendly, in that it will be using tank-return gas (TRG or “boil-off” gas) from transported cargo as fuel for its onboard power plant. All LNG-bunkering equipment is fully compliant with MARPOL and ECO-S environmental standards. Its integrated digital system means the vessel can be controlled by just one crew member, directly from the navigation bridge.