Adds Kremlin's comment in paragraph 3

By Valentina Za 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, adding it will retain only its payments business in Russia.

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.

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

UniCredit has held on to the Russian bank despite the Ukraine war, with CEO Andrea Orcel saying he would not sell at a loss like rivals such as France's Societe Generale SOGN.PA.

Orcel said on Tuesday that the contribution of the Russian business to UniCredit's net profit would roughly halve this year from 800 million euros ($941 million) in 2025, falling further to around 100 million euros by 2028.

UniCredit's planned partial sale of its Russian arm, which was one of the country's top 15 banks in early 2022, entails an income hit of between 3 billion and 3.3 billion euros, which the bank said would not affect its dividend or share buyback policy.

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.

UNICREDIT TO SPLIT RUSSIAN BUSINESS

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

Dutch lender ING INGA.AS last month dropped the sale of its Russian business ​to Moscow-based Global Development JSC, which it announced ⁠in January 2025, saying it had "no realistic expectation that the buyer will obtain the ​necessary approvals".

UniCredit said it will 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.

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

At the end of March, UniCredit Russia's payments business totalled less than 5 billion euros, the bank said this week. 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 2028-2030 net profit ambitions were unaffected by the planned Russian disposal.

UniCredit Russia did not respond to a Reuters request for details about the planned spin-off and sale.