MILAN (Reuters) - Intesa Sanpaolo (BIT:ISP) is working to dispose of its business in Russia but "bureaucratic steps" have so far prevented it from closing the deal, the CEO of Italy's biggest bank said.
Reuters first reported in August that Intesa (LON:0HBC) was getting closer to securing approval to transfer its Russian business to local management and in September President Vladimir Putin signed a decree authorising transactions involving the assets.
CEO Carlo Messina told Bloomberg Television that Intesa had cut its overall exposure to Russia to a "negligible" level, but had not managed to severe ties yet with the local subsidiary.
"We're trying," he said. "There is an involvement of the local management in this transaction and other counterparties ... but it's not easy to complete a disposal."
Western sanctions against Russia in response to Moscow's invasion of Ukraine two years ago have reduced the potential buyers for Western companies trying to exit the country.
"In Russia you have some bureaucratic steps that you need to have in this kind of transaction. So for the time being we maintain our (local) exposure," Messina said.
Reporting full-year results on Tuesday, Intesa said it had halved its cross border exposure to Russia last year to 500 million euros, net of provisions and credit export guarantees.
Customer loans extended by the local unit were also halved during 2023, to 100 million euros net of writedowns.
Messina said that unlike other banks, for which Russia was a significant profit contributor, Intesa booked zero net profit in consolidated terms from its Russian business.
Italy's second-biggest bank UniCredit (LON:0RLS) has also been working to reduce its exposure to Russia, where it runs a commercial bank. Intesa's unit only served corporate clients.
UniCredit's 2023 results on Monday flagged an expected 300 million euro hit to its net interest income next year from the scaling down of its Russian business.
UniCredit said it had cut its cross border exposure by 90% last year. It also halved customer loans at its Russian business, which turned in a 644 million euro net profit, versus a 221 million euro net loss in 2022.