Adds reference to May 2025 proposal from United Arab Emirates consortium, comments from one of the firms in paragraphs 5-6

By Valentina Za, Elena Fabrichnaya and Anastasia Lyrchikova

MILAN, May 7 (Reuters) - Italy's UniCredit CRDI.MI said on Thursday it had struck a non-binding deal to sell parts of its Russian bank to a "well-established private investor" in the United Arab Emirates and would only retain its payments business in Russia.

Opposed to selling its operations at a loss after the Ukraine war broke out, UniCredit has been shrinking its Russian business under orders from the European Central Bank and following a clash with the Italian government over accusations that the bank's interests in Russia posed a threat to national security.

The Kremlin, which needs to approve transactions such as the one UniCredit is proposing, said it would review it once it receives an application, while pointing out it would be a complex decision.

Thursday's surprise announcement follows UniCredit's launch this week of a hostile buyout offer for Germany's Commerzbank CBKG.DE.

In May 2025, three UAE companies approached Italy's Treasury with a proposal to buy UniCredit Russia. The move led nowhere.

Inweasta, one of the firms, on Thursday said in an emailed response to Reuters that "it actively monitors investment and advisory opportunities" across its core markets, including Russia, but only comments on closed transactions.

UniCredit Russia currently ranks 23rd in the country by net assets, according to Veles Capital analyst Sergey Zhitelev. It was Russia's 12th-largest bank four years ago.

"Business continuity is expected to be maintained during the transition period," Zhitelev said.

NO IMPACT SEEN ON SHAREHOLDER REWARDS

The planned partial sale of the business entails an income hit of between 3 billion euros and 3.3 billion euros, which the bank said would not affect shareholder reward plans, UniCredit said.

The Russian operations contributed 800 million euros ($941 million) to UniCredit's net profit in 2025, a figure CEO Andrea Orcel said it would halve this year and fall further to around 100 million euros by 2028.

In terms of its capital ratios, the overall impact of the disposal will be an improvement of about 35 basis points.

UniCredit said it expected to close the deal in the first half of 2027, subject to securing relevant authorisations.

It said it would split its Russian business in two and keep full ownership of the payments arm, with the unnamed UAE buyer acquiring the rest, without disclosing the deal value.

Roman Zhirnov, a lawyer at Delcredere law firm, told Reuters Russia's central bank would need to vet the buyer to clear the change of bank ownership, while a government commission would determine the size of an exit tax levied on similar disposals.

UNICREDIT TO MAINTAIN KEY PAYMENTS ROLE

International sanctions hitting potential buyers and Russia's increasingly strict regulation have made it hard to leave the country for companies that failed to exit swiftly.

Dutch lender ING INGA.AS last month dropped the sale of its Russian business ​to Moscow-based Global Development JSC saying it had "no realistic expectation that the buyer will obtain the ​necessary approvals".

Intesa Sanpaolo ISP.MI secured the necessary presidential green light in September 2023, but it is still awaiting central bank approval.

With Russian banks cut off from global payments networks, UniCredit Russia plays a key role in processing cross-border payments for Western and non-sanctioned corporate clients.

At the end of March, UniCredit Russia's payments business totalled less than 5 billion euros. It is now restricted to U.S. dollars and euros, compared with about 20 currencies four years ago when it was five times bigger.

UniCredit said its net profit targets for the years 2028 through 2030 were unaffected by the planned Russian disposal.