Industry news

Austria’s Raiffeisen Bank may exit Russia as Ukraine crisis deepens

17 March | Strategy

Austrian lender Raiffeisen Bank International (RBI) has said it is considering all strategic options for its Russian arm, including exiting the country, as the Ukraine crisis deepens.

Notably, RBI is one of those few international banks that have significant exposure to Russia, which is facing unprecedented sanctions over its invasion of Ukraine.

Earlier, media reports emerged that the bank could exit Russia but at the time RBI said it has no plans to leave the country.

RBI CEO Johann Strobl said: “This unprecedented situation leads RBI to consider its position in Russia. We are therefore assessing all strategic options for the future of Raiffeisenbank Russia, up to and including a carefully managed exit from Raiffeisenbank in Russia.”

The Austrian lender’s business in Russia accounted for nearly a third of its net profit of $1.7bn in 2021.

17 March | Distribution

Hong Kong expands wealth management connect to brokerages

Hong Kong regulators have granted an in-principle nod to expand Wealth Management Connect to the brokerages in the city, reported Bloomberg citing people aware of the development.

The move is subject to applications and other requirements. It will also require approval by mainland Chinese regulators.

Opening up of the scheme to brokerages will further increase the competition for participating banks for an estimated $500m in annual fees.

A spokesperson for Securities and Futures Commission (SFC) declined to comment when approached by the news agency.

Launched last year, Wealth Connect facilitates cross-border investments in the Greater Bay Area, consisting of Hong Kong, and southern mainland cities including Shenzhen and Guangzhou.

The scheme, which garnered participation from around 13,000 individual investors in the first month, currently has a line-up of 23 approved Hong Kong banks, including HSBC and Citigroup.

Hong Kong Investment Fund Association (HKIFA) welcomed SFC’s move to expand the scheme to brokerages but said that improvements should also be looked at, according to the report.

17 March | Regulation

UK may allow fund managers to employ ‘side pocket’ model to manage Russian assets

The Financial Conduct Authority (FCA) in the UK is considering the so-called ‘side pockets’ method to enable fund managers deal with Russian and Belarussian assets amid sanctions.

Britain’s financial watchdog said that it is in discussions with stakeholders about options to allow the UK authorised retail funds to make exceptional use the practice.

Side pockets will enable authorised fund managers the option to separate Russian and Belarussian assets, which are hard to sell or value due to sanctions imposed on both countries over the military attack on Ukraine.

According to FCA, the side pockets could enable existing investors in funds with Russian exposure to redeem the rest of their investment while keeping illiquid Russian assets separately.

They method allows them to retain rights to any eventual value of these assets, which are marked to zero.

Additionally, side pockets could enable new investors to join the fund without incurring exposure to Russian assets.

It will also allow certain funds to end their current suspension of dealing, the watchdog said.

16 March | Products

Bank of America to bolster ESG investment team in Asia

Bank of America (BofA) is planning to beef up its ESG investment team in Asia in a bid to better tap into the evolving market, reported Bloomberg.

The bank is seeking to double its underwriting of green bond deals in China over the next two to three years, BofA China head Wang Wei revealed to the news agency in an interview.

Wei said that the bank aims to underwrite $50bn of green and sustainability-linked bonds, equities and loans for Chinese customers with carbon-neutral targets by the middle of the decade.

16 March | Strategy

Russia’s VTB to shutter London investment banking arm amid sanctions

Russia’s second-largest lender VTB is winding down its London-based arm of its investment banking unit VTB Capital, reported Reuters.

The bank, which fell under the sanctions over Russia’s invasion of Ukraine, is ‘currently proceeding with an orderly wind-down of its positions and obligations’.

The bank laid off some of its staff working at the unit last week.

The bank is planning to retain some of the employees as caretakers as it moves to shutter its London business, Bloomberg reported.

Earlier this month, the UK’s Office of Financial Sanctions Implementation issued a licence that allowed VTB to continue paying its staff until March next year.

It is not clear whether there would be pay cuts. The UK regulators are examining the bank’s books.

16 March | Strategy

Credit Suisse reviews Russia operations as Ukraine crisis deepens

Swiss investment bank Credit Suisse is reviewing its business in Russia as the country continues to accelerate its military invasion of Ukraine, reported Reuters.

Credit Suisse CEO Thomas Gottstein said that the firm is currently analysing the situation while no decision has been finalised regarding its Russian operations.

Gottstein was quoted as saying at Morgan Stanley’s European Financials Conference in London: “We’re now reviewing the situation. It’s a very serious situation.

“We will see over the coming months what it means for our operations. I have not taken any decision.”

Russian clients are said to account for nearly 4% of Credit Suisse’s wealth management assets.

15 March | Deals

Australia’s WT Financial to buy financial adviser group Synchron

Australia-based WT Financial Group (WTL) has brokered a deal to buy its larger rival and privately-owned financial adviser group, Synchronised Business Services.

WTL will pay a total consideration of up to $7.96m, consisting of at least $3.5m in cash and $1.02m worth of shares.

Melbourne-headquartered Synchron was established in 1998 by Don Trapnell and John Prossor.

15 March | Strategy

Citigroup to exit more business in Russia

Citigroup, which shuttered its consumer business in Russia in April 2021, has expanded the scope of its exit process in Russia to include other lines of business.

The American banking major, which follows its rivals JP Morgan, Goldman Sachs, and Deutsche Bank in exiting Russian markets, added that it will continue to slash its remaining ‘operations and exposure’.

Citigroup in a statement said: “We have also decided to stop soliciting any new business or clients. We are providing assistance to multi-national corporations, many of whom are undergoing the complex task of unwinding their operations.

“We will continue to manage our existing regulatory commitments and our obligations to depositors, as well as support all of our employees during this very difficult time.”

Citigroup is said to have around $10bn exposure to Russia. The bank previously said that it could lose nearly half of that in the worst-case scenario, according to a Reuters report.

14 March | Deals

Goldman Sachs in talk to buy financial advice platform Nucleus

Goldman Sachs is in talks to buy a stake in UK-based financial advice platform Nucleus, Sky News has reported.

A private equity fund owned by the US banking giant is said to be one of four firms vying for a stake in the platform, the report said.

Centerbridge Partners, GTCR and HPS other contenders for the stake.

14 March | Strategy

Deutsche Bank pulls out of Russia in response to Ukraine invasion

German lender Deutsche Bank is winding down its business in Russia in response to the country’s escalating military attack on Ukraine.

The move comes after the bank encountered scathing criticism from investors and the government for continuing its ties with Russia following the launch of the military invasion.

Deutsche said it ‘condemns the Russian invasion of Ukraine in the strongest possible terms and support the German government and its allies in defending our democracy and freedom’.

The bank has been cutting its Russian exposure and footprint since 2014.

It recently reported ‘limited and substantially mitigated’ risk exposures to both Russia and Ukraine.