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Western banks are considering asset swaps with Russian financial institutions to avoid losses from write-downs of their business, Financial Times reported citing sources.

Italian bank UniCredit and US-based Citi have explored options where they would swap their Russian business for the local bank’s foreign businesses, the sources said.

UniCredit and Citi are among the few western banks with significant exposure to the Russian market.

UniCredit has received multiple offers from Russian financial institutions for its local operations, the sources said.

One of the interested parties was Interros Group, which is owned by Russian oligarch Vladimir Potanin, the sources aware of the offer said.

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UniCredit rejected Interros’ offer and continued to discuss the sale of its Russian arm to some of the non-sanctioned financial institutions and a deal is yet to be finalised, they added.

Notably, Interros has already bought several businesses, including Tinkoff Bank founder’s stake in TCS Group and Societe Generale’s Russian arm Rosbank.

The deal will cost France-based Societe Generale around €3.1bn and the Italian bank refused Interros’ offer to avoid such a loss, one of the sources said.

The Italian lender has been in talks with non-sanctioned banks to swap its Russian loan book for the latter’s foreign credit portfolio.

As the sanctions keep mounting, these options are also becoming more challenging.

Citi on the other hand prefers a divesture to a non-sanctioned entity rather than an asset swap.

The US-based bank is having “multiple conversations” to sell the retail and part of the commercial banking business in the country, a source said.

Western banks have also reached out to the regulators to make an exception and allow them to conduct business with those subject to sanctions as the last option.

A banker involved in the discussion said: “If you cannot sell to a sanctioned person, what is the only option? You go and talk to the people imposing the sanctions.

“Basically they have told us we could sell to a certain type of sanctioned person or entity. We probably will not, but have had the talks, we have the cover to discuss things, we need to explore all options.”