Goldman Sachs Secures Green Light from Putin for Sale of Russian Operations
In the wake of extensive sanctions imposed on Russia following its actions since 2014 and escalated after 2022, several foreign-owned banks, including Goldman Sachs, have decided to sell their Russian businesses. These sanctions, imposed by the EU, US, UK, and others, have severely limited Russia’s access to global financial markets, increased transaction risks and costs, and made continued banking operations there legally and commercially challenging.
Goldman Sachs, which has had a presence in Russia since 1998, is one of the foreign-owned banks prohibited from selling shares without Putin's approval. The sale of its Russia business resulted in a $726 million hit for the bank. The investment bank has entered into a binding agreement to dispose of its Russian subsidiary, subject to various conditions. However, the details of the sale are yet to be disclosed.
Goldman Sachs is not alone in this decision. The Armenian investment firm, Balchug Capital, has been approved to buy Goldman Sachs' Russia business for an undisclosed sum. Founded in 2010, Balchug Capital's CEO and founder, David Amaryan, previously worked at AllianceBernstein, Citi, and Russian investment bank Troika Dialog. The firm has also purchased licensing rights for Goldman Sachs' Russia business, marking at least the fourth deal it has closed to purchase Western businesses pulling out of Russia in the past two years.
Another foreign bank, Dutch bank ING, has announced its exit from Russia by selling its business to local company Global Development JSC. However, the sale is pending approval from European Union regulators. Raiffeisen Bank, an Austrian lender, has been trying to navigate an exit from Russia for the past three years but is currently trapped due to profits from supplying Putin's military.
The role of Armenian firms as intermediaries in these transactions is noteworthy. Armenian firms have become common middlemen between Russian and Western markets due to international sanctions and Russia viewing Armenia as friendlier than Western countries. These intermediaries operate in complex logistics and financial networks, helping to wind down business or redirect flows under sanctioned environments.
For example, companies like Intershipping Services LLC and Litasco Middle East DMCC have been sanctioned for facilitating illicit trade linked to Russia’s shadow operations, underscoring the role of certain middlemen in managing or enabling transactions involving Russian assets amid sanctions.
In summary, Western banks are exiting Russia primarily due to the extensive sanctions, legal risks, operational difficulties, reputational concerns, and inability to access Russian financial markets. Armenian firms, such as Balchug Capital, are acting as common intermediaries in these transactions, operating through jurisdictions and structures designed to navigate sanctions compliance while enabling partial business wind-down or asset transfers.
- Despite the challenges, Goldman Sachs and other foreign-owned banks, such as ING, are selling their businesses in Russia due to the severe limitations imposed by sanctions, making continued operations financially and legally challenging.
- Armenian firms, like Balchug Capital, are playing a significant role in these transactions, acting as intermediaries due to their familiarity with complex logistics and financial networks, which can help manage or enable transactions involving Russian assets amid sanctions.
