Russian lender Sovcombank has signed an agreement to purchase the local unit of GE Money Bank, a subsidiary of US-based General Electric (GE).
Financial terms of the acquisition have not been disclosed. The deal is expected to close after receiving approval from local regulators, according to the company.
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The decision to sell the Russian unit is part of GE’s plan to sell a majority stake in its Switzerland-based GE Money Bank in the fourth quarter and focus more on other industrial interests, reported Reuters.
Ranked among top banks by assets in the country, the Russian unit of GE Money Bank provides high-margin consumer lending services.
The global financial crisis in 2008-2009 had forced many foreign banks to enter into Russia, but are now retreating back to use funds to meet higher capital requirements at home.
Consumer lending in Russia has gone up by 50%-70% in recent years despite high margins. The Russian central bank is therefore easing the expansion by demanding more capital and to provide for potential bad loans.
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By GlobalDataGE Money Bank will join Barclays, HSBC and Santander among others, which have exited from their operations in Russia.
