London-based sanctioned Russian billionaires Mikhail Fridman and Petr Aven of the Alfa Group are preparing to sell Russia’s largest private lender Alfa Bank for RUB178bn ($2.3bn) to long-time partner Andrei Kosogov, the Financial Times reported citing unnamed sources close to the deal. Before the Russian full-scale military invasion of Ukraine, the bank had a book value of $10.6bn.

Last month Alfa Bank has been hit by fresh EU sanctions on the anniversary of Russia’s full-scale military invasion of Ukraine, on top of the personal sanctions already in place by the EU and UK.

Kosogov used to head Alfa’s investment unit and has not been sanctioned by the West, making him an attractive candidate for taking over the bank. The deal would have to be approved by Russian authorities, who have most recently allowed Dutch-based multinational mobile major VEON to offload its anchor Russian operator VimpelCom.

However, the Kremlin has been particularly strict with letting banks exit sanctioned Russia, while dozens of banks from “unfriendly” countries remain trapped and unable to exit the market.

The Financial Times also confirmed recent reports that campaigning is under way to lift sanctions from Fridman, Aven and another Alfa Group partner, German Khan, as they have long disputed claims of close Kremlin ties.

The billionaires “want to do everything they can to get out of their Russian assets so that sanctions will be removed,” one of the people with knowledge of the transaction told the Financial Times. But finalising the Alfa Bank deal could be difficult because of the complexity of obtaining regulatory approval in multiple jurisdictions, other sources cautioned.

Alfa Group was part of a consortium of Russian oligarchs AAR (Alfa Access Renova) that held a major share in the Russo-British oil joint venture TNK-BP that they sold to state-owned oil major Rosneft in March 2013 in a $55bn deal. Mikhail Fridman took his share of the proceeds and set up LetterOne (aka L1) in London. Prior to Russia's invasion of Ukraine this investment vehicle has been trying to get back into the oil business internationally, as well as making other profitable investments. 

Fridman grew to prominence in the 1990s after his Alfa Group made him a billionaire. After getting his start as a window cleaner in the aftermath of the collapse of the Soviet Union he went on to found a business empire that includes Alfa Bank, the highly successful X5 retail and supermarket group and numerous other businesses.