Luxembourg-based ABH Holdings, which owns Alfa-Bank and Alfa-Insurance in Russia, is withdrawing from all Russian assets. This was reported today by the BBC (blocked in Russia) with reference to a statement by a member of the board of directors of the holding company, Andrew Baxter.
In early March, Alfa-Bank confirmed that Fridman and Aven were going to sell their shares in it. Now Fidman and his partners are preparing to sell the insurance business.
Now Friedman owns almost 33% of the bank’s shares, and Aven owns about 12.5% in Luxembourg-based ABH Holdings. As of March 1, approximately 30% of Alfa-Bank’s assets were in foreign currency.
Now ABH Holdings is negotiating with European regulators a deal to sell the Russian bank and other assets. Various options are being discussed, said Andrew Baxter.
According to the Financial Times, at the beginning of March, the value of a 45% stake in Alfa-Bank was only $2.3 billion, or 178 billion rubles. Before the special operation, the credit institution was valued twice as much. The buyer and owner of the bank should be one of the founders of Alfa Group, Andrey Kosogov, who is not under sanctions. It was Kosogov who began to consolidate the bank in his hands shortly after the start of the SVO and the imposition of sanctions against Fridman, Aven, and another co-founder of Alfa Group, Herman Khan.
Andrew Baxter said that, in accordance with European law, the holding’s shareholders, who are under EU sanctions, cannot dispose of their shares, as they are frozen. He also noted that the Luxembourg company does not participate in any way in the management of Russian assets.
Alfa-Bank came under virtually all possible sanctions – first under the blocking restrictions of the UK and the United States, and in February under the sanctions of the European Union, where its parent structure is located.
There was no talk of selling the insurance business and other assets in early March. Alfa Insurance occupies a large share of the car insurance market in Russia – about 25%. The BBC interlocutor did not rule out that the company also had contracts with government agencies.
A number of assets associated with Alfa Group are already in trouble. At the end of 2022, the National Bank of Ukraine suspended the license of the Ukrainian company Alfa Insurance due to issues with the business reputation of shareholders.
The purpose of the sale of the bank and the withdrawal of assets from Russia for Fridman and Aven is to get out of the sanctions. Indeed, formally, it is precisely because of this that they ended up on the sanctions lists of the UK and the EU. And the sale of the shares of Fridman and Aven to the bank will help to quickly move into the zone of Russian jurisdiction, a source close to the deal told RBC. However, experts note that such changes will not affect the sanctions status of Alfa-Bank, just as, most likely, the sanctions status of Fridman and Aven will not be facilitated either.
How will the decision to sell assets affect Alfa-Bank and its shareholders? Sergey Glandin, a partner at the NSP law firm, an expert in sanctions law, comments:
“He himself came under blocking sanctions in April last year, so everything is difficult for him now with the western perimeter. The decision to exit these assets is logical to get rid of a number of complexities and problems. Because the majority of Western counterparties, I think that they remain in Alfa Insurance, since insurance activities are full-fledged international ones, some partners in the West are needed here, and these partners refuse to cooperate until such a business brings a number of conclusions from Russian, American, British law firms, as well as from Western regulators, such as OFAC, OFC, German BAFA, that these regulators have checked and confirm that yes, indeed, this business is no longer owned and controlled by sanctioned persons, then It is non-toxic and business relations can be continued with it. It is inappropriate to assess the chances here as such, because these processes are not always public, many holdings of large sanctioned Russian businessmen underwent such a restructuring, after which they went to apply with the restructuring documents they have to these regulators, as well as to law firms, which will independently confirm the fact of termination control and possession by sanctioned persons. Everything is non-public here, and we can only rely on information from open sources.”
