EU narrow sanctions exemption could help UniCredit close stalled Alfa deal

By Elena Fabrichnaya and Valentina Za

MOSCOW/MILAN, July 24 (Reuters) - The EU has approved a narrow sanctions exemption that could allow UniCredit to complete a long-delayed transaction involving Russian businessmen Mikhail Fridman and Petr Aven, according to the latest package of measures against Russia.

European Union sanctions hitting Fridman, one of the founders of Russian investment firm Alfa Group, and long-time Alfa top executive Aven, had stopped UniCredit from completing a transaction agreed in 2015.

The latest sanctions package approved by the European Council on Thursday allows regulators to authorise transactions involving the two businessmen when necessary to settle a put option that was agreed and exercised before Russia's 2022 invasion of Ukraine.

"Those derogations are narrowly circumscribed to allow a Union operator to exercise a specific pre-existing contractual obligation, arising from an agreement concluded in 2015," the EU said.

Under the exemption — which does not mention UniCredit — regulators can release frozen funds and authorise the transfer of shares and related payments needed to settle the option.

A person briefed on the matter said the development was positive for Italy's second-biggest bank.

UniCredit announced an accord in August 2015 to sell its Ukrainian subsidiary Ukrsotsbank to Luxembourg-based ABH Holdings (ABHH), the parent company of Alfa Bank, in exchange for a minority stake in ABHH.

The transaction contained a put option allowing UniCredit to dispose of that stake after five years. However, EU sanctions imposed on Fridman and Aven prevented the deal from being completed.

UniCredit is in talks to sell to an unnamed United Arab Emirates investor parts of its Russian business. 

After failing to extricate itself quickly from Russia at the start of Moscow's war in Ukraine, the bank led by Andrea Orcel has been shrinking its Russian operations due to mounting pressure from European Central Bank supervisors and the Italian government.

On Thursday, Orcel told analysts the Russia exit process was on track. 

(Writing by by Valentina Za; Editing by Emelia Sithole-Matarise)