American Express Exiting Russian Market in Response to Putin’s Banking Decree

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In a significant move reflecting the growing financial and political tensions between the West and Russia, American Express has decided to close its subsidiary in Russia.

According to Lenta, the decision by “American Express Bank” to voluntarily liquidate its operations, rather than sell its business, was reported by Interfax, citing data from the Unified State Register of Legal Entities (EGRUL). This makes American Express Bank the first foreign bank subsidiary to voluntarily relinquish its license instead of pursuing a sale within Russia. The bank received presidential approval for its voluntary liquidation in May 2024.

This development follows a decree by President Vladimir Putin in October 2022, which banned transactions involving shares and stakes in 45 banks, including American Express Bank. This decree was part of broader efforts to control foreign influence and financial activity within Russia amid escalating sanctions and geopolitical strife.

American Express had already suspended its partnerships with Russian entities in March 2022, citing compliance with U.S. and international sanctions. The company acknowledged its limited business ties in Russia and reiterated its commitment to adhering to relevant laws as the situation evolved. “We followed U.S. sanctions and those of international partners, leading to the suspension of cooperation with partner banks in Russia. We will continue to comply with all relevant laws as the situation develops,” American Express representatives stated.

The withdrawal of American Express underscores a broader trend of foreign financial institutions reevaluating their presence in Russia. This trend has been driven by the increasingly challenging regulatory and geopolitical environment. For example, the Italian bank UniCredit SpA has sought clarification from the European General Court regarding the European Central Bank’s (ECB) directives to reduce its footprint in Russia. UniCredit has already significantly reduced its exposure, with cross-border risks falling by 91% and country-specific risks by 65%. However, the bank is concerned that the ECB’s stringent conditions could lead to “serious unforeseen consequences” and wants to ensure that the ECB has not overstepped its authority.

The decisions by American Express and other foreign financial institutions highlight the complex and often contentious nature of operating in Russia amid ongoing international sanctions and geopolitical tensions. These moves are part of a larger trend of companies reassessing their global operations in response to evolving political and economic landscapes. As the situation continues to develop, it is likely that more financial institutions will follow suit, further impacting the financial and economic relationship between Russia and the West.