British bank Barclays, which is closing its retail business in Russia, may have made one of the worst foreign investments in the country's post-Soviet history, reports said today.
Barclays said yesterday that it would sell Barclays Bank Russia by the end of the year and focus on Russian investment banking through Barclays Capital.
The British giant launched its retail activities in Russia in 2008 by acquiring Expobank for £373m sterling in a deal that was hailed at the time as one of the most important in the country's nascent banking sector.
But Barclays Russia was never able to recover from the 2008 global financial crisis after trying to focus on the premium banking sector and servicing clients such as restaurants and major stores, whose business was plummeting. The bank announced a £244m write-down in its 2010 annual report in connection with its Russia operations.
'The purchase by Britain's Barclays of a Russian bank may turn out being one of the worst foreign investments in Russia,' Russia's Vedomosti business daily wrote.
'Barclays has already written down nearly $400m but after selling its Russian subsidiary, its losses may grow,' Vedomosti continued.
The newspaper compared the investment to the US financier George Soros' 1997 purchase of a stake in the Russian communications company Svyazinvest, a deal in which he eventually lost more than $1.2 billion.
Moscow business newspapers noted that other foreign banks were also winding down their Russian operations. 'Barclays is not the first foreign first bank to come away disappointed from Russian business development,' the Kommersant business daily said.
The newspaper noted that Belgium's KBC Bank and Sweden's Swedbank were also selling stakes in their Russian subsidiaries, with a similar decision reached last year by Spain's top lender Santander.
