What’s Happening with Goldman Sachs in Russia?
- President Vladimir Putin has given the green light for Goldman Sachs to sell its business in Russia. This comes nearly three years after the bank announced plans to close its operations there.
- Armenian investment firm Balchug Capital will buy the unit, although the purchase price hasn’t been made public. This move is detailed in a decree signed by Putin.
- A spokesperson for Goldman Sachs declined to comment, but insiders confirmed that a binding agreement has been reached to sell the Russian subsidiary, pending certain conditions.
Context of the Sale
Goldman Sachs has had a presence in Russia since 1998. It was one of the first major banks to announce its exit plans after Russia invaded Ukraine in February 2022. However, the actual process of leaving has proven complicated. Many foreign banks, including Goldman, needed Putin’s approval to sell their operations.
After the invasion, attention shifted to U.S. banks, especially Citigroup, which had the highest exposure to Russia. Citi aimed for a quick exit from retail banking in the country but still has about $9 billion tied up there.
Balchug Capital has been active in acquiring Western companies that are stepping away from the Russian market. Founded in 2010, the firm has already made several deals over the past two years. CEO David Amaryan has experience with major financial institutions, including AllianceBernstein and Citi.
Amaryan stated, “We have worked closely with all the relevant authorities to ensure that this transaction complies with local and international laws.” He also emphasized that Goldman Sachs will be a significant part of Balchug’s portfolio.
Recently, Armenian companies have stepped in as middlemen due to sanctions, making Armenia seen as a friendlier option compared to Western nations. For instance, Dutch bank ING announced its sale of its Russian business to Global Development JSC, although this deal is still pending regulatory approval.
Meanwhile, Raiffeisen Bank from Austria is grappling with its exit strategy from Russia. The bank has faced challenges, particularly as it has been benefiting from companies supplying goods to the Russian military.