Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit

Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit

Goldman Sachs Moves Forward with Exit from Russia

Russian President Vladimir Putin has authorized the sale of Goldman Sachs’ Russian subsidiary to Armenian investment fund Balchug Capital. This approval, outlined in a government decree, marks a significant step in the U.S. bank’s efforts to fully withdraw from Russia.

Tighter Restrictions on Foreign Asset Sales

Since the onset of the conflict in Ukraine, Moscow has imposed increasing restrictions on foreign businesses attempting to exit the Russian market. Any sale involving foreign banks now requires direct approval from President Putin, making exits complex and lengthy.

Binding Agreement in Place

A source confirmed that Goldman Sachs has entered a binding agreement to sell its Russian unit. However, the transaction remains subject to various conditions. According to banki.ru, the Goldman Sachs subsidiary ranks as the 229th largest lender in Russia based on net assets.

Balchug Capital’s Expanding Presence

Balchug Capital, led by CEO and founder David Amaryan, has been actively acquiring foreign businesses departing from Russia. Last year, the fund took over the Russian assets of U.S. machinery giant Caterpillar. The firm has not yet issued a statement regarding the Goldman Sachs acquisition.

Western Banks Still Operating in Russia

Despite sanctions and geopolitical risks, a handful of Western banks continue to operate in Russia. These include:

• Raiffeisen Bank International (Austria)
• UniCredit (Italy)
• OTP Bank (Hungary)

These banks remain in the market nearly three years after the conflict began, navigating both regulatory constraints and strategic considerations.

ING Groep’s Costly Exit Strategy

Dutch financial institution ING Groep recently reached an agreement to sell its Russian operations to local firm Global Development JSC. The deal, which resulted in a €700 million ($726.2 million) profit loss, still requires regulatory approval from the European Union. Foreign banks attempting to exit Russia face additional hurdles due to the requirement for both Russian and EU regulatory clearance.

Challenges in Completing Sales

Receiving presidential approval does not guarantee a successful asset sale. In September 2023, Italian bank Intesa Sanpaolo was granted permission to sell its Russian assets but has yet to complete the process. The bank has significantly reduced its exposure to the Russian market but continues to face obstacles in fully divesting.

Conclusion

The approval for Goldman Sachs’ exit through Balchug Capital highlights the complexities foreign financial institutions face when attempting to leave Russia. While some banks remain, others continue to grapple with regulatory barriers and economic losses as they attempt to wind down operations. The evolving situation underscores the challenges of Western financial disengagement from Russia amid ongoing geopolitical tensions.

“Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit” “Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit” “Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit” “Putin Approves Armenian Investment Fund Purchase of Goldman Sachs Russian Unit”