CEO of Milan-based international banking group UniCredit on Monday said, giving away its Russian arm UniCredit Bank Russia for free is morally wrong. Andrea Orcel, Chief Executive Officer of the financial institution, was speaking at a conference on financial education for students.
He also said that “We would be gifting something worth 3 billion [euros] for nothing to someone who is probably in a leadership that we have decided to veto.”
UniCredit, established in 1998 as UniCredito Italiano is a pan-European bank with a strong presence in all European countries.
What is the importance of UniCredit in Russia?
UniCredit is one of the most successful European banks in Russia. UniCredit Bank Russia, a wholly-owned subsidiary of UniCredit, has more than 100 branches in different locations in Russia.
With 986000 individuals clients and 22600 corporate clients, Юникредит банк (local name) is the 14th largest bank in Russia.
Why is it difficult to exit from Russia?
Andrea Orcel said that a sudden exit from Russia will impact 4000+ employees of the bank in the country negatively. Clients and customers who depend upon the institution will also find it difficult to manage their accounts and funds.
According to various reports, the bank has been looking for potential buyers for its Russian unit. Back-to-back sanctions by western economies are said to have hampered the chances of striking a deal.
The bank is trying to find out potential buyers from other countries such as India, China, and Turkey. These countries have not supported the sanctions so far. Investors in these countries might be interested in buying shares having lower prices due to the war situation.
A deal with Russian investment is still on the table. But as days progress, the window is getting shorter to land on a deal.
Even though UniCredit has repeatedly said mentioned all options are on the table, including exiting completely from Russia, it would not be an easy task. Banks’ obligation towards thousands of employees, clients, and shareholders will be a hurdle for an easy pull out from the most sanctioned country in the world.
How will suspension of business affect European economies?
During the conference, Andrea Orcel said the rush of financial institutions to pull out from Russia will only result in harming European economies and financial institutions. As the European Union had noted earlier, the recent sanctions, embargoes, and a string of exits from Russia will hurt Europe more than Russia. It will be a counterproductive action.
As of March 10th 2022, almost 350+ companies have either suspended their operations or scaled down their business in Russia.
