Sanctions | FT: Some western companies are canceling their plans to leave Russia

Western ones the withdrawal of companies from Russia is even more difficult, and some companies have already started to cancel their departure intentions, says the economic newspaper The Financial Times (FT).

According to the newspaper, the intentions of Western companies that are still in Russia in one way or another are currently being slowed down by, among other things, restrictions imposed by the Russian administration and a lack of suitable buyer candidates.

According to FT, the Russian administration has gradually increased the price that companies have to pay for their withdrawal. According to the newspaper, the administration has imposed a mandatory 50 percent discount on assets coming from “unfriendly” countries, as well as an exit tax of at least 15 percent.

At the same time, it is increasingly difficult for Western companies to find buyers for their Russian operations and assets who would not violate Western sanctions and would be suitable for both the selling company and the Russian administration.

“Many European companies have found themselves between a rock and a hard place. They said they were leaving. They were presented with buyer candidates that they could not accept,” says a manager who works with Western companies in Russia, whom the newspaper does not name.

Part of western companies have already changed their minds about the necessity of leaving Russia, according to FT.

According to the magazine, for example, the multinational cosmetics giant Avon started the process of selling its business operations in Russia, but decided not to accept the offers it received.

“For over 135 years, Avon has championed women wherever they are in the world, regardless of ethnicity, nationality, age or religion,” the company said, according to the FT.

Second A manager working in Russia with Western companies interviewed by FT says that the change in companies’ views is remarkable.

“The companies that left during the first weeks of the attack saw it as a moral imperative. Nowadays, we are thinking about whether it is absolutely necessary to leave. Do you want to leave? Some of these companies have built four or five factories in more than 30 years. They are not selling them at a 90 percent discount,” says the manager interviewed by FT.

Researcher at think tank Carnegie Russia Eurasia Alexandra Prokopenko again tells FT that rising wages and a better-than-expected economic situation have fueled the consumption behavior of Russians, which has made Russia an even more attractive market for Western companies, especially in the consumer sector.

American Yale University has been maintained since the beginning of the Russian war of aggression list about how western companies have reacted to the war in Ukraine.

Only four of the Finnish companies are among the three weakest categories in Yale’s list.

According to the university’s list, material and raw material supplier Bang & Bonsomer has suspended new investments in Russia, but continues to operate in the country. The company’s CEO Mikko Teittinen told for HS in April 2022that it intends to significantly reduce its operations in Russia.

According to the list, the paint company Nor-Maali has stopped investing in Russia, but according to Yale’s assessment, it is still among the companies that continue to operate in the eastern neighbor.

At the turn of the year, Nor-Maali said on its website that its separation from the Russian business is still being processed by the authorities. According to the company, the new schedule for the exit is during the first half of the current year.

Of the bigger ones Finnish companies SRV and Tikkurila are among the companies on Yale’s list that have reduced some of their significant transactions in Russia, but continued others.

Construction company SRV last announced the matter in August 2023. At that time, the company said it had sold most of its remaining Russian holdings. According to the company, its only remaining asset in Russia was a 50 percent ownership of the Pearl Plaza shopping center in St. Petersburg. The company has said that it is trying to sell this shareholding as well.

Tikkurila, on the other hand, has said that due to the sanctions, it has no opportunity to influence the operations of its Russian subsidiary. The company has assured that it will comply with the sanctions and will do everything in its power to complete the exit from Russia as soon as possible.