ING Group, the Dutch multinational banking and financial services corporation, has officially announced its decision to divest from the Russian market. This strategic move involves the sale of its complete stake, 100%, in ING Bank (Eurasia) to Global Development, marking the end of ING’s operations within Russia, which had started over 30 years ago.
Global Development, which specializes in factoring services, was founded recently with capital of just 15,000 rubles. The company is managed by Andrey Muravyov, who has past experience running other factoring businesses. According to ING's statement, this transaction is set to close by the third quarter of 2025, pending regulatory approvals.
“This deal will effectively terminate ING's activities on the Russian market,” the bank disclosed, highlighting the substantial changes since the onset of the Ukraine conflict. Following February 2022, ING scaled back its operations significantly, stopping new business with Russian companies and reducing lending activities. Reports indicate the volume of lending to Russian clients has plummeted by more than 75% during this period.
Despite efforts to manage the exit from the Russian market diligently, ING anticipates facing considerable financial repercussions. The group projects losses of approximately €700 million, which includes €400 million tied to the difference between the sale price and the net book value of the business, alongside another €300 million attributable to adjustments due to currency fluctuations.
The significance of this divestment cannot be understated; it aligns with similar strategies adopted by several Western companies since geopolitical tensions escalated following the conflict. ING had been one of the most reliable banks on Russian soil, frequently ranked among the top ten banks by Forbes. The divestment, described as being preceded by comprehensive legal due diligence, is viewed as the culmination of several months of strategic planning by ING.
With the conclusion of this agreement, Global Development aims to continue serving clients previously associated with ING under its new branding. ING has firmly stated its commitment to mitigating risks associated with its remaining offshore exposure to Russian clients, indicating about €1 billion is still reserved for such risks as of September 30, 2024.
By pulling out of Russia, ING joins the ranks of numerous international corporations reevaluated their operations in light of the changing geopolitical climate, demonstrating the broader impact of the conflict. The group's exit reflects the growing concern for operational integrity and geopolitical risks facing firms engaged with Russian clients.
Looking forward, it remains to be seen how Global Development will transition the operations and maintain relationships with the existing clientele as it seeks to establish its brand identity. For ING, the focus will shift to solidifying its operations within its core markets of the Netherlands, Belgium, Luxembourg, and Germany.
This divestment symbolizes not only the deterioration of international business relations but also sets the stage for new dynamics within the Russian banking sector as domestic entities navigate the gaps left by international players. With significant operational hurdles and financial losses at play, ING’s exit could potentially reshape the financial service offerings available to corporate clients within Russia.