(Bloomberg) -- While many Russian tycoons were scrambling to shift their assets and move their superyachts in the wake of Western sanctions, the country’s richest man, Vladimir Potanin, was doing all that and more.

Potanin’s Interros Capital, which redomiciled to Russia from Cyprus in December, agreed on Monday to buy Societe Generale SA’s entire stake in Rosbank PJSC. It’s an asset Potanin knows well: He and fellow billionaire Mikhail Prokhorov previously owned the bank, hired some of its executives and had planned to take it public in the mid-2000s until SocGen took a 10% position. Within a few years, the Paris-based lender controlled the entity, Prokhorov was no longer a shareholder and Potanin cashed out his remaining stake.

It has been a difficult period for Potanin, 61, the president of MMC Norilsk Nickel PJSC. The miner is facing increased freight costs and insurance issues and it’s tougher to find ships to carry its nickel, according to people with knowledge of the situation. Interros’s planned 90 billion ruble ($1 billion) investment in Russian projects aimed at international tourists might be partially suspended. And he has lost positions alongside the world’s elite at nonprofits in New York that he cultivated over decades. 

Still, Potanin’s ability to make a major purchase from France’s third-largest bank puts in stark relief the difference between him and other oligarchs of his generation: He’s not sanctioned by the U.S., U.K. or European Union. While other billionaires like Vladimir Lisin have also avoided penalties, Potanin wielding his $29 billion fortune to strike deals with the West contrasts with Mikhail Fridman and Petr Aven, who have said in interviews that sanctions ruined their lives.

“One reason the deal is possible is that he’s not on the sanctions list,” said Jerome Legras, a managing partner in Paris at Axiom Alternative Investments. While full terms of the accord weren’t disclosed, SocGen said it would take a hit of about 3 billion euros ($3.3 billion) on the sale. That suggests as long as Russia’s banking system doesn’t collapse, Potanin “will have made a great deal,” Legras said.

In a statement through Interros, Potanin said he bought back SocGen’s stake “to maintain the stability of Rosbank and create new opportunities for its clients and partners.” A spokesperson didn’t immediately reply to a request for additional comment.

Potanin is Russia’s richest person, largely due to his roughly one-third stake in Nornickel, according to the Bloomberg Billionaires Index. He’s one of the country’s original oligarchs who’s still wealthy, profiting along with Fridman, Aven and other bankers in the 1990s from the privatization of natural resource companies after the Soviet Union’s collapse. Potanin was also first deputy prime minister under Boris Yeltsin.

Nickel Defense

Canada recently added Potanin to its sanctions list, the first time a Western government has targeted him after the Ukraine invasion. Leonid Mikhelson, Russia’s second-wealthiest person, had also previously escaped penalties for more than a month but has since been singled out by Canada and the U.K.

Experts say it’s little mystery why Potanin remains largely unscathed: His Nornickel accounts for about 40% of the global output of palladium, which helps cut pollution from cars, and 20% of high-grade nickel, a key metal in electric vehicles. Any penalty levied on the company could recoil on Western governments through supply shortages and higher prices for crucial raw materials. Though Potanin doesn’t have a majority stake, sanctioning him could reverberate through Nornickel and the industry as well.

U.S. President Joe Biden “can’t say that for all nickel coming in from Russia, we’ll dump it in the Boston harbor,” Jay Newman, a former portfolio manager at Elliott Management Corp., said in a phone interview. Sanctions “are not targeted to people whose products we need.”

Still, Biden has taken some steps to rectify the raw material imbalance. He invoked the Defense Production Act on March 31 to increase domestic nickel production and wean the country off of “unreliable foreign sources” for critical minerals and metals. Some 20% of the nickel comes from Russia, much of it from the mine of Potanin’s Nornickel that was once a Siberian gulag.

‘Enormous Pressure’

While Nornickel is still distributing its metals under long-term deals with industrial clients, some of the world’s largest transport companies, including A.P Moller-Maersk A/S, halted bookings in and out of Russia. Shipments of palladium, traditionally done by passenger jets, have had to be re-routed with flights from Russia cut to only a few destinations.

Finnish company Outokumpu Oyj, one of the world’s largest stainless-steel manufacturers, and Germany’s BASF SE are among others distancing themselves from Russian nickel. Outokumpu Oyj said it’s looking for alternatives while BASF said it was fulfilling existing contracts but not pursuing new business with Nornickel.

The environmental footprint is also a concern -- Nornickel is the world’s largest polluter of man-made sulfur dioxide, according to a 2020 Greenpeace report. 

The company is investing more than $4 billion to build sulfur capture and utilization facilities in Norilsk. It’s part of a strategy to “dramatically” reduce emissions, a Nornickel spokesperson said.

Biden is “under enormous pressure to sanction anything Russian he can identify, including nickel,” said Michael Klare, author of “Resource Wars: The New Landscape of Global Conflict.” “This is going to be a tough balancing act because there are so many valuable materials that come from Russia that are critical to the world economy.” 

“But people are ferociously angry,” he said. “Sanctions may go far and there will be economic consequences.”

Pragmatic Posture

In his few public remarks on the Ukraine crisis, Potanin has hinted at these tensions. He has voiced his opposition to the country’s retaliation against international penalties and cautioned not to burn bridges with foreign companies leaving Russia, instead advocating for “calibrated, pragmatic” counter-moves.

“In light of the economic restrictions directed against Russia, there may be an understandable desire to act symmetrically,” Potanin said on Norilsk Nickel’s Telegram channel on March 11. “But the example of Western countries shows the economies of these countries themselves suffer from the imposition of sanctions against Russia. We must be wiser and avoid a scenario where retaliatory sanctions hit us ourselves.”

Potanin’s fortune has fared better than most other Russians tracked by the Bloomberg Billionaires Index. His net worth is down by about $100 million since the day before the Ukraine invasion.

Interros redomiciling to Russia may help shield his assets from possible sanctions, as well as the divorce claim for as much as $7 billion that he’s been fighting in London. The holding company said it wants to be an anchor investor in Russia’s Far East, which is why it chose to register in the so-called offshore zone on Russky Island in Vladivostok.

Interros holds most of its assets in Russia and finds it natural to invest from Russia, especially as the benefits that were offered only in international offshore havens are available, Potanin said in a statement.

As for Rosbank, Potanin’s holding company owned it starting in 1998, before SocGen acquired a position in 2006 and later merged it with other Russia operations. 

The agreement with Interros came “after several weeks of intensive work,” SocGen said. It expects the deal to close in the coming weeks, pending regulatory approval.

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