The U.S. Treasury announced sanctions on Expobank, the proposed buyer of HSBC's Russian unit. The sanctions were part of a broader set that included restrictions on entities in China, Turkey, and the United Arab Emirates, Reuters reported.
The U.S. Treasury reports that, the sanctions on Expobank were imposed "for operating or having operated in the financial services sector of the Russian Federation economy." This action aligns with the U.S. strategy to limit Russia's connections with the international financial system, a strategy initiated in response to Moscow's military intervention in Ukraine in February 2022.
HSBC had previously disclosed its intention to sell a 100% stake in its Russian unit, HSBC Bank, to Expobank in June 2022. However, Moscow's tightening restrictions on foreign asset sales, requiring President Vladimir Putin's approval for such deals, added complexities to the process.
Expobank, in response to the sanctions, asserted that its operations would remain unaffected. The bank claimed to have taken necessary actions to ensure the comfortable and convenient work of its clients, emphasizing the continued functionality of cards issued in Russia, including those by Visa and Mastercard.
The implications of these sanctions on HSBC's exit plans from Russia remain uncertain. When questioned about the potential impact, the U.S. Treasury declined to comment, and HSBC provided no immediate response.
Earlier in the year, HSBC had announced a $300mn loss on the expected sale of its Russian business. Moscow's demands for significant discounts on foreign asset sales, coupled with the challenge of obtaining President Putin's approval, had posed hurdles for Western banks looking to reduce their exposure to Russia.
While Italian lender Intesa Sanpaolo secured Putin's approval for a deal in late September, HSBC was still awaiting the green light, a process that the recent sanctions may have jeopardized.
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