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Swedbank to offload discontinued operations in Ukraine and Russia

Swedbank has planned to discontinue its remaining operations in Ukraine and Russia and inked a share purchase agreement for its Ukrainian subsidiary with Mykola Lagun, the majority owner in Delta Bank.

Subject to concerned regulatory approvals, the transaction is likely to be concluded during the first half of 2013.

As of the first quarter of 2013, Swedbank’s Ukrainian and Russian operations will be reported as terminated operations.

Due to the divestment, the Swedish lender will report impairments in Ukraine of nearly SEK340m ($52.3m) under discontinued operations during the first quarter of 2013.

Swedbank president and CEO Michael Wolf said that the deal will free up necessary capital and resources required and help focus on its home markets.

"This is the final step in our strategy to concentrate Swedbank’s business activities to Sweden and the three Baltic countries," Wolf added.

After the completion of the transaction, the residual exposure in Ukraine will comprise real estate assets managed by Swedbank’s subsidiary Ektornet with a book value of approximately SEK600m ($92.43m) which will be disposed of later.

The bank said that it will stop all new business in Russia and shut down its existing operations. Swedbank’s net lending in Russia (including leasing) is nearly SEK2.6bn ($400m), which consists mostly of performing corporate loans, will decrease through amortization.

The lender owns real estate assets worth SEK150m ($23.1m) in Russia, which also will be offloaded.

Operating in Sweden, Estonia, Latvia and Lithuania, Swedbank provides various kinds of financial services and products to its 7.8 million retail customers and around 600,000 corporate customers.

Additionally, it also trades in other Nordic countries, the US and China and the group had total assets of SEK1.84 trillion ($284.5bn), as of 31 December 2012.