British bank Barclays has agreed to sell its Russian retail business to local banker Igor Kim and plans to sign a deal in the coming days, two banking sources told Reuters on Monday.
Any deal is likely to result in a painful loss for Barclays, which agreed in March 2008 to buy Expobank for $745-million (U.S.), or four times book value, before the global crisis slashed sector valuations to a fraction of that level.
Barclays decided in February to sell the unit and focus on investment banking, saying it was unable to compete on the local market, where some 60 per cent of assets are split between state-controlled lenders.
Barclays, whose unit is ranked the 119th-largest in Russia by assets, failed to agree a sale with Kazakhstan's Kazkommertsbank and Russia's mid-sized Renaissance Credit Bank, sources told Reuters earlier.
Igor Kim, a banker with a fortune estimated by Forbes magazine at $500-million, is seen as the final buyer and the deal may be announced on Tuesday, sources said.
"Tomorrow all must be resolved, it is the final stage," a source familiar with Mr. Kim's plans said. The second source confirmed the information but added that it is a preliminary plan.
One of the sources said Barclays Russian unit is likely to be sold to entities affiliated with Mr. Kim but he will be the final owner. A Barclays spokeswoman in Russia declined to comment. Reuters could not reach Mr. Kim for comment on Monday.
Mr. Kim is already a shareholder with mid-sized MDM Bank with a 11 per cent stake, which Mr. Kim acquired after merging his URSA bank with MDM Bank three years ago. The united lender is now Russia's 15th largest by assets.
Disagreements with other partners at MDM over strategy have led Mr. Kim to consider other projects, sources said. They did not say how much Mr. Kim will pay for the Barclays unit, but media have reported it could be valued at 0.8-0.85 times book.