Raiffeisen Bank International (RBI) has finalized the sale of its Belarusian subsidiary Priorbank JSC to the Emirati Soven 1 Holding. An agreement to sell the 84.74 percent stake has been signed, the bank announced on Friday. Negotiations have thus been concluded, but the authorities still have to approve the deal.
The sale will have a negative impact of around 300 million euros on the group’s result. The amount will take effect when the transaction is completed and will be the difference between the book value of the equity and the expected purchase price, according to the bank, which expects the closing to take place in the fourth quarter. In addition, the sale is expected to have a further negative effect of another 500 million euros, which will result primarily from the “reclassification of predominantly historical currency losses” that will be recorded in other comprehensive income until the closing. The Belarusian ruble has suffered massive losses against the euro since 2011.
The background to this is that currency devaluations are reflected as a capital effect on an ongoing basis, but are not reflected in the profit and loss account (P&L). However, with the sale, the currency losses would have to be offset once in the P&L, an RBI spokesperson explained in the spring.
With the sale, RBI is completely withdrawing from the Belarus market and thus further reducing its risk in the Eastern European region, the bank said. In recent months, both the European Central Bank (ECB) and US authorities have put great pressure on RBI to reduce or abandon its business in Russia and Belarus. RBI is currently reducing its business in Russia, but a Russian court recently banned it from selling by means of an interim injunction.
RBI holds 87.74 percent of Priorbank JSC, in which the Austrian Raiffeisen Group has held a stake since 2002. In the 2023 financial year, the RBI subsidiary posted a profit of 112 million euros.