Western companies have seen the value of their assets in Russia almost halve since the start of the war in Ukraine, highlighting the scale of the economic decoupling between Russia and the West after more than four years of war, Vedomosti reports.

According to calculations by Russian business daily, the combined assets of companies from Western countries operating in Russia fell from an estimated $481bn at the beginning of 2022 to $244bn today. The decline reflects a combination of corporate exits, forced asset sales, nationalisations, sanctions and a sharp reduction in new investment.

The newspaper's analysis suggests that the cost to Western business extends far beyond asset write-downs. Companies that exited Russia or scaled back operations are estimated to have foregone more than $600bn in revenue and at least $16bn in profit that they might otherwise have earned in the Russian market. The largest losses were concentrated in the automotive, consumer goods, energy and financial sectors.

Hundreds of foreign companies announced plans to leave the country following the invasion, while Western governments imposed sweeping sanctions designed to isolate the Russian economy. Although Moscow initially sought to encourage foreign firms to remain, relations deteriorated as sanctions expanded and the Kremlin introduced increasingly restrictive conditions on corporate exits.

Foreign investors wishing to sell Russian assets have frequently been required to accept steep discounts, make contributions to the Russian budget and obtain approval from government commissions. In several high-profile cases, Russian authorities went further, placing assets under temporary state management or effectively nationalising businesses. However, the majority of foreign firms working in Russia have been reluctant to leave the highly profitable market, the biggest consumer market in Europe. As IntelliNews reported, less than 9% of foreign firms have actually fully exited the Russian market.

Vedomosti estimates that Western investors have suffered more than $100bn in direct losses through asset write-downs, forced sales, exit taxes and expropriations. Some economists cited by the newspaper believe the true figure could be as high as $170bn.

Investors from friendly countries have rushed into the breach to grab large market shares overnight and have more than doubled their asset base in Russia over the same period.

Western owners selling up have handed control to their former Russian managers in a series of MBOs. Some of these deals include buy-back clauses should the war end and sanctions lifted. Among the most prominent examples is Vkusno i Tochka, which acquired the Russian operations of McDonald's Corp (MCD) following the US fast-food giant's departure in 2022. The chain has retained much of the former business's market position and claims to have overtaken the US franchise in terms of Russian sales after only one year.

The story is the same in banking. Rosbank, formerly controlled by Société Générale (GLE), was sold to Russian billionaire Vladimir Potanin's Interros group after the French lender exited the market. The bank has since continued operations under Russian ownership as part of the broader restructuring of the country's financial sector.

The Russian market has reorientated away from Europe and North America and towards Asia, the Middle East and other non-Western partners. Trade with China, India, Turkey and Gulf states has expanded sharply since the start of the war, helping offset some of the effects of sanctions and the departure of Western capital. Moscow shop shelves were briefly emptied in the spring of 2022 when sanctions were first imposed, but by summer they were full again with largely the same selection of goods as traders took over from producers to supply Russian retail outlets. The big losers from the sanction regime have not been the Russian population, but the Western producers.