ROME—Italy’s UniCredit UNCFF -1.46% SpA has pulled out of talks to take over Russian lender PJSC Bank Otkritie Financial Corp., one of the first instances where tensions over Ukraine have run into corporate deal making.
Earlier in January, the Italian bank launched a due-diligence process as part of a possible takeover of Otkritie, a bank that was bailed out by the Russian central bank in 2017.
“Given the geopolitical environment, we decided to withdraw from the data room,” UniCredit Chief Executive Andrea Orcel said Friday.
The collapse of the talks highlights the challenges that companies, especially in Europe, are facing amid the escalating tensions between the West and Russia over Ukraine. Large European and U.S. businesses are attempting to balance their business interests in Russia with increasing pressure from their home governments to isolate Moscow.
This week, Italian business leaders, including Mr. Orcel, held a videoconference with Russian President Vladimir Putin on how to foster business ties between the two countries. Eni SpA, a big Italian oil company, pulled out of the long-planned meeting at Rome’s behest.
Western sanctions against Russia triggered by the country’s 2014 annexation of Crimea have pushed many European companies to shrink their Russian operations. But many big companies continue to have close ties to Russia.
Mr. Orcel, whose bank already owns the largest foreign lender in Russia, said that UniCredit remains committed to doing business in the country.
Russian operations took a toll on UniCredit’s capital position and profitability in the last quarter of 2014, following the collapse of the value of the ruble against the euro. The decline was induced by a plunge in the price of oil combined with the impact of sanctions introduced at the time.
UniCredit warned on Friday that the tensions over Ukraine might weigh on the European economy in the coming months.
“The negative economic impact is expected to mainly come from a potential energy shock, especially for countries more vulnerable such as Germany, possible tensions in financial markets and, to a lesser extent, through the trade channel,” the bank said in a statement coinciding with its fourth-quarter results.
A number of large Western companies have maintained a large presence in Russia, in particular energy companies and commodities traders, given the country’s vast reserves of oil and natural gas. Italy’s largest bank, Intesa Sanpaolo SpA, which like UniCredit has operations in both Russia and Ukraine, said business was proceeding as usual in both countries.
Other European banks said they are monitoring the situation, but that so far they aren’t noticing any impact on their businesses in the two countries.
Write to Giovanni Legorano at giovanni.legorano@wsj.com
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Appeared in the January 29, 2022, print edition as ‘Italy’s UniCredit Ends Talks to Take Over Russian Lender.’
