Several of Russia's big metallurgical companies – Severstal, Rusal and Evraz - have sold a significant part of their Ukraine assets, as the breach between Ukraine and Russia grows ever deeper. The companies exited citing economic and security concerns for their operations in a country that is in an undeclared war with Russia.

In late October, Severstal said in a statement that the company's subsidiary, Cambay Services Ltd, has completed the sale of its wholly-owned subsidiary Dealzone Holding Ltd, which holds a 98.6% stake in Ukraine's Dneprometiz.

"The sale of Dneprometiz will result in greater efficiency improvements at Severstal-Metiz and will further enhance the profitability of the Severstal group," the company's statement reads. "Dneprometiz operates at high levels of capacity utilisation and delivers strong financial results. At the same time, the asset is non-core to Severstal's business which is focused in Russia."

The company has not disclosed the terms of the deal. However, Maxim Khudalov at Acra Ratings believes that the plant together with its debts could be sold by Severstal for $30mn-$40mn, Russian business daily Vedomosti reported on November 8.

The retreat represents a caving into the realities of the fraught relations between Ukraine and Russia. Known as the “near abroad” to Russians, Ukraine has been the first port of call when making foreign investments – and Russia has been a net exporter of capital for almost the entire post-Soviet era, investing more in other countries than it has received as foreign direct investment (FDI).

Going to Ukraine has been a no-brainer for most Russian companies as the two countries were the most economically integrated of any of the former Soviet republics and they are extremely close both culturally and linguistically. Moreover, given Ukraine’s almost total lack of reforms over the last two decades, assets remain extremely cheap, even to Russians, and yet the 45mn strong population is bigger than Poland’s 38mn.

Russia’s increasingly sophisticated and well financed raw materials companies were ideally placed to invest in Ukraine and make a killing. Severstal acquired 60% of Dneprometiz shares in 2006 and built up its stake to 98.6% in subsequent years. It had no intention of going anywhere until the political relations were wrecked.

Also in October, Russian steel giant RusAl sold its Mykolaiv alumina plant to Switzerland-headquartered trader Glencore. "Soon we expect that managing specialists from Glencore will come to the plant," Interfax news agency quoted the plant's director general Dmytro Myrny as saying at the time. "We expect that the transition period will last for around one year." The Ukrainian plant provided RusAl with 10.5% of the primary raw materials for the production of aluminium – alumina – according to Vedomosti.

Meanwhile, metallurgical giant Mechel has lost its Donetsk-based electrometallurgical plant because of the nationalisation of assets by the Kremlin-backed rebels of the government of the so-called Donetsk People's Republic.

In 2017, Russia's second largest steel company Evraz, which is controlled by Russian oligarch Roman Abramovich, also sold a 99.42% stake in Ukrainian iron ore producer Evraz Suha Balka for $108mn to Berklemond Investments Ltd., a member of the fast growing DCH Group controlled by Ukrainian businessman Alexander Yaroslavsky.

Evraz also agreed to sell another Ukrainian subsidiary, Evraz Yuzhkoks, in October, 2016. However, the deal has not yet been closed. The representative of Evraz did not answer questions sent by Vedomosti. In August, Evraz's president Alexander Frolov said that the company "have variants and the understanding how to sell it", but "it is too early to speak of any potential deal or its terms".

At the same time the group does not intend to sell Dneprovsky Iron and Steel Works as it considers its operation stable and effective. "We see the potential to create additional value for the site", the Ukrainian Metal online outlet quoted Frolov as saying at the time.

The exit of the Russian metal companies comes in parallel with the exodus of Russian state-owned banks. Amongst the largest in the country, the National Bank of Ukraine (NBU) made it clear they are no longer welcome earlier this year. The population even went as far as to brick up the entrance of one branch of Russian state-owned retail giant Sberbank to make the point.

Sberbank is now gone. The National Bank of Ukraine (NBU) approved the purchase of the Lviv-headquartered middle-sized VS Bank, a subsidiary of Sberbank, by local banker Sergiy Tigipko on November 8.

However, the chances of its sister bank VTB being sold are small, according to Andrei Kostin, CEO of VTB. VTB Bank’s Ukrainian subsidiary planned to raise its capital by $99mn by issuing new shares, the bank said in a statement on August 19, but since then appears to given up any hope of rescuing anything from the rubble.

"We'll be downsizing our business there and our expenses, selling assets little by little, withdrawing what loans we can and maybe selling all kinds of collateral. But probably nobody will let us sell anything there," Kostin said on September 6.