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The long road out of Russia for Citigroup has reached a decisive turn. The bank said Monday its board has signed off on the sale of its Russian subsidiary, AO Citibank, to Renaissance Capital, a move expected to result in a pre-tax loss of roughly $1.2 billion, driven largely by currency translation effects.

The transaction, disclosed in a regulatory filing, is slated to close in the first half of 2026, marking another milestone in Citi’s retreat from the country following years of geopolitical and financial pressure.

Currency Translation Drives the Hit

Citigroup said the approvals will lock in a pre-tax loss in the fourth quarter of 2025, stemming primarily from currency translation adjustment losses. Those losses will remain parked in Accumulated Other Comprehensive Income until the deal formally closes.

In plain terms, currency translation adjustments reflect the gains or losses that arise when a foreign subsidiary’s financial statements are converted from its local currency into the parent company’s reporting currency. Accumulated Other Comprehensive Income, or AOCI, sits within shareholders’ equity and captures certain unrealized gains and losses that bypass the income statement.

Despite the headline loss, Citi said the cumulative impact of the transaction would be capital neutral for its common equity tier 1 ratio, a key measure of bank strength.

Not the Final Number

The bank cautioned that the loss tied to the sale could still shift, particularly as foreign exchange rates fluctuate before closing.

Citi also said it will classify its remaining Russian operations as “held for sale” beginning in the fourth quarter of 2025, signaling that the exit process is nearing its final chapters.

Green Light From Moscow

The board’s approval follows a crucial nod from the Kremlin. Last month, Russian President Vladimir Putin authorized Renaissance Capital to acquire Citibank’s Russian operations, clearing a regulatory hurdle that had loomed over the deal.

The approval underscores how foreign exits from Russia often hinge on state consent, turning corporate divestments into high-stakes diplomatic chess matches.

A Wind-Down Years in the Making

Citigroup’s departure from Russia has been unfolding for years. In August 2022, the bank announced it was scaling back its presence, winding down consumer banking and local commercial banking operations as part of a broader effort to reduce exposure in the country.

With the Citigroup Russia unit sale approved, Citi edges closer to closing a costly but deliberate chapter, trading short-term losses for a cleaner balance sheet and a sharper focus on its core markets.