Putin Greenlights Goldman Sachs' Exit from Russia
Hey Banking Fanatic!
Goldman Sachs is officially packing up in Russia! President Vladimir Putin has approved the sale of its Russian division to Balchug Capital, making Goldman one of the few Western banks to fully exit the country.
This follows similar moves—Putin recently allowed Natixis and ING to sell their Russian operations. Meanwhile, Citigroup has wound down most services but still holds $9B in Russian exposure.
Goldman, which first entered Russia in 1998, ranked 230th by assets domestically. The buyer, Armenia-based Balchug Capital, is led by David Amaryan, a former AllianceBernstein and Citigroup exec who’s been snapping up Russian real estate since the war began.
“We’ve ensured full compliance with all laws and sanctions,” Amaryan said, calling the acquisition a key addition to Balchug’s portfolio.
Stay tuned for more Digital Banking updates below 👇. Catch you soon!
Cheers,
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GOLDEN NUGGET
𝗪𝗵𝗮𝘁 𝗶𝘀 𝗶𝗻𝘁𝗲𝗿𝗰𝗵𝗮𝗻𝗴𝗲, 𝗮𝗻𝗱 𝘄𝗵𝗮𝘁 𝗳𝗮𝗰𝘁𝗼𝗿𝘀 𝗶𝗺𝗽𝗮𝗰𝘁 𝘁𝗵𝗲 𝗶𝗻𝘁𝗲𝗿𝗰𝗵𝗮𝗻𝗴𝗲 𝗿𝗮𝘁𝗲?
Let’s dive in:
Every time a consumer swipes a card to make a purchase, the merchant pays an interchange fee.
Revenue from the fee gets divided among parties that facilitated the transaction: the banks that send and receive the payment, the card network, the payment processor, and—more recently—FinTechs and businesses that embed payments.
When you take the bird-eye view diagram above as an example:
If a user swipes a card issued by a Neobank, $1.70 (interchange fee) goes to the issuing bank and the card network, $0.50 (acquiring fee) goes to the acquiring bank.
Interchange fees are not always the same though.
𝗪𝗵𝗮𝘁 𝗳𝗮𝗰𝘁𝗼𝗿𝘀 𝗶𝗺𝗽𝗮𝗰𝘁 𝗶𝗻𝘁𝗲𝗿𝗰𝗵𝗮𝗻𝗴𝗲 𝗿𝗮𝘁𝗲?
► Credit vs. Debit
Interchange rates on credit cards are significantly higher than those on debit cards.
► Rewards programs
These benefits are financed through higher interchange rates, and have proven to be very popular with consumers.
► Online vs. Offline
Online purchases are less secure than in-person purchases.
► Consumer vs. Commercial
Cards associated with business or corporate accounts carry higher interchange rates than consumer cards.
► Merchant Category Code (MCC)
Every merchant is categorized by the major card networks according to a Merchant Category Code (MCC). This means that there are different interchange rates depending on whether someone uses a card in a supermarket, a retail store, a gas station, or with some other form of merchant.
► The Card Network
Different card networks charge different rates. Visa and Mastercard are known for charging lower rates. Other networks like AMEX are known for charging higher rates.
► Network partner programs
Visa and Mastercard’s partner programs like VPP (Visa Partner Program) and MPP (Mastercard Partner Program) often give specific retailers interchange rates that are much lower than the networks’ published interchange rates.
► Size of the issuing bank (𝗢𝗡𝗟𝗬 in the US 🇺🇸)
Larger banks are subject to a regulation called the Durbin Amendment that caps interchange rates on consumer debit transactions. Smaller banks are exempt.
As a result, these smaller banks can earn more revenue from interchange rates, which benefits FinTechs and embedded finance businesses that partner with them.
I highly recommend reading more about these topics in Connecting the dots in Pyament for more interesting info on this topic.
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