Russia's Sovcombank to buy local GE Money Bank
MOSCOW (Reuters) - Russia's mid-sized Sovcombank is buying the local unit of GE Money Bank, a subsidiary of U.S. conglomerate General Electric (GE.N), in another departure of a foreign bank from a Russian domestic market dominated by state-controlled lenders.
Sovcombank, ranked among Russia's top 60 by assets, said on Monday it had signed a binding agreement to buy GE Money Bank, expecting to close the deal after getting the green light from local regulators. It did not disclose the price.
The Russian unit of GE Money Bank is ranked among Russia's 150 biggest banks by assets and is focused on high-margin consumer lending. It declined to comment.
General Electric will float a majority stake in its Swiss consumer finance unit GE Money Bank in the fourth quarter, as part of a retreat from the sector to focus more on industrial interests.
Many foreign banks entered Russia just before the global financial crisis of 2008-2009. They are now scaling back operations to allocate funds to meet higher capital requirements at home, at a time when Russian state-controlled giants like Sberbank (SBER.MM) and VTB (VTBR.MM) are ramping up their business.
Although consumer lending margins remain high, the Russian central bank is trying to cool consumer lending expansion, which saw growth of about 50-70 percent in recent years, by demanding more capital and provisions for possible bad loans.
Among others, Britain's Barclays (BARC.L) and HSBC (HSBA.L) and Spain's Santander (SAN.MC) have scaled back their operations in Russia. However, other foreign banks such as Italy's UniCredit (CRDI.MI) and Austria's Raiffeisen Bank (RBIV.VI) see Russia as a key source of growth.