Disclosed Talks at Covert Gathering of Russian Legislators and European Investors
Here's a refreshed take on the original article:
Even with Western business leaders expressing interest in the Russian market during meetings with Russian deputies, no specific foreign companies have publicly declared their intention to return as of now. Anatoly Aksakov, chairman of the State Duma's Financial Market Committee, shared that foreign financiers conveyed their interest in operating in Russia during the gathering, but he didn't disclose any names. In a nod to potential returns, Italian home appliance producer Ariston Group has already made a come back.
Before the current strained relations between Russia and Western countries, several foreign banks ran operations in Russia. Among them were major players like Raiffeisenbank (Austria), Rosbank (France), UniCredit Bank (Italy), Citibank (USA), Home Bank (Czech Republic), and OTP Bank (Hungary). However, French Societe Generale (Rosbank's owner) and Czech PPF (Home Bank's owner) have offloaded their Russian assets, with Citibank winding down its retail business in the country prior to 2022.
As of now, foreign banks account for around 4-5% of the Russian financial market, marking a significant drop from the 11% share at the start of 2022, according to Natalia Milchakova, a leading analyst at Freedom Finance Global. Raiffeisenbank and UniCredit Bank remain on the CB's list of systemically important credit organizations.
In April 2023, Raiffeisen Bank International (RBI) delayed a decision on selling its Russian business due to pending changes in the international situation and the resumption of political interaction between Russia and the USA.
The Russian government has laid out certain conditions for foreign companies looking to re-enter the market, including localizing production and technology transfers, as well as avoiding alignment with countries deemed unfriendly since 2022. Strict requirements like these, combined with legal barriers such as amendments allowing Russia to block share repurchases by foreign investors, have left many companies wary of making any firm commitments.
While some unnamed firms have reportedly expressed preliminary interest, none have met the stringent criteria as of April 2023. Powerhouses such as McDonald’s and Coca-Cola have publicly declined to confirm any plans to return to the Russian market, contradicting Russian media speculation. The cautious approach taken by foreign businesses is a clear indicator of the regulatory uncertainties and domestic market protection measures in place.
Follow this special page for more details
Sources:
- https://www.reuters.com/business/russia-business/russia-to-evaluate-moscow-stock-exchange-foreign-investor-applications-2023-04-13/
- https://www.fitchratings.com/research/sovereigns/russia---potential-changes-to-foreign-investment-regime-present-risks-for-entrenched-businesses-22-03-2023
- https://www.insiderintelligence.com/content/mcdonald-corp-ceo-chris-kempczinski-denies-plans-return-russia
- https://www.forbes.com/sites/andrewbeath/2023/04/21/russian-business-lobby-tables-plan-to-bar-foreign-firms-from-market-occupied-by-russians/
- https://www.reuters.com/business/russia-to-consider-barring-foreigners-certain-sectors-putin-ordered-2023-04-12/
- I'm not sure if any specific financiers from the Czech Republic, like PPF, have shown intent to re-enter the Russian market in 2023, given the stringent conditions and legal barriers.
- The resumption of foreign companies, particularly those from the finance industry, in the Russian business sector is uncertain, as shown by the delayed decision of Raiffeisen Bank International in selling its Russian business.
- Despite the general-news suggesting otherwise, powerhouses like Coca-Cola and McDonald's have yet to meet the criteria and have publicly denied any plans to return to the Russian market.
- The onset of the industry's resumption could be influenced by political factors, as foreign financiers are wary of the regulatory uncertainties and domestic market protection measures in place.
- The finance, business, and politics landscape in Russia is evolving, with the Russian government imposing conditions like localization of production and technology transfers on foreign companies looking to re-enter the market.
