SocGen buys VTB’s Rosbank stake in costly Russia turnaround

France’s Société Générale is raising its stake in Russia’s Rosbank to above 90 per cent, betting it can turn around the troubled Russian banking unit even as rivals have quit a country where they could not compete.

While players such as Citi and Austria's Raiffeisen thrive, many have found post-Soviet Russia too hard to crack: rife with credit, legal and corruption risks, and dominated by state giants Sberbank and VTB.

SocGen, which bought into Rosbank in 2006, spent billions of dollars to fix the underperforming Russian bank. Yet it was shaken by scandal in May, when it fired Rosbank CEO Vladimir Golubkov after he was charged with bribery.

Under Monday’s deal, SocGen is buying 10 per cent more of Rosbank from Russia’s second-largest bank, state-controlled VTB, taking its stake in the unit to 92.4 per cent.

The deal gives SocGen strategic scope to either realise its declared goal of achieving sustainable scale and profitability in Russia, or stage a cleaner exit should it fall short. – Reuters