Breaking up with Russia is hard for many Western firms, despite war, 15 April 2023

Only a small percentage of the hundreds of companies that promised to leave Russia after its invasion of Ukraine have exited, according to several groups keeping a scorecard — and for those that dawdled, departing has only become more expensive and complicated.

The Western companies that stayed are often heavily reliant on Russian business, with the losses of an exit perhaps outweighing possible damage to their brands of staying in the country as it wages a brutal war against Ukraine. Some businesses even grabbed a bigger market share as their competitors departed.

Many others announced they would pause or scale back operations but continue to trade. Others said they would sell their Russian assets but still are seeking buyers or trying to reduce the cost of leaving...

In damage-control mode, President Vladimir Putin did all he could to block the exits, forcing foreign companies to get state permission to sell assets, seizing assets and barring foreign banks and energy firms from selling stakes without a presidential waiver. The Finance Ministry in December announced measures against investors from “unfriendly countries” who sold assets, including a 50 percent discount on the sale price and a 10 percent tax.

The Kyiv School of Economics (KSE), which follows 3,141 foreign companies through its Leave Russia project, reports that only 211 companies have exited — fewer than 7 percent — while 468 have announced plans to leave...

“There are a lot of companies that did nothing or still continue to wait,” Onopriienko said. “And after one year of war, many companies will lose the opportunity to sell their businesses and will continue to lose because, finally, those assets could be nationalized or bought at a very cheap price”.

A study by the University of St. Gallen in Switzerland found that fewer than 9 percent of European Union and Group of Seven companies with subsidiaries in Russia had left the country by November.

A count by the Yale School of Management of nearly 1,600 foreign companies and organizations in Russia found that 1,022 were withdrawing or suspending operations, with 234 digging in and others buying time or scaling back. The studies use different methodologies, with KSE and St. Gallen focusing on completed exits.

“There’s plenty of companies that people think are out because they made an announcement that they would leave Russia,” said Mark Dixon, who runs a London mergers and acquisitions consultancy, the1, and founded the Moral Rating Agency, a nongovernmental organization that focuses on top companies still doing business in Russia. Instead, many companies halted only a part of their business, while others had not fulfilled their promises to leave, he said...