Russian billionaires Mikhail Fridman and Petr Aven are primed to offload their stakes in Alfa-Bank in a $2.3bn sale of Russia’s largest private lender, as they seek to free themselves from western sanctions.

The oligarchs’ longtime business partner Andrei Kosogov, who has not been targeted by sanctions, has agreed to buy the Russian bank for Rbs178bn ($2.3bn) from its Cyprus-based parent company, according to four people with direct knowledge of the agreement and documents detailing its terms. Subject to regulatory approval, London-based Fridman and Aven, who has also left Russia, would cease to be indirect shareholders of Alfa-Bank, they added.

The Russian oligarchs are fighting western sanctions imposed on them over their alleged ties to the Kremlin. The US and UK placed punitive measures on Alfa-Bank last year after Vladimir Putin’s invasion of Ukraine, while the EU introduced its measures last month.

Fridman and Aven have received no indication that selling Alfa-Bank will convince the EU to remove the sanctions, which member states are due to extend by March 15.

Fridman, who grew up in Ukraine, made his fortune in Russia and moved to London in 2015, has long disputed claims he is close to the Kremlin. He and Aven own 45 per cent of Alfa-Bank between them via a Luxembourg-based holding company which in turn controls the bank’s Cypriot parent company.

They “want to do everything they can to get out of their Russian assets so that sanctions will be removed,” one of the people with knowledge of the transaction said.

The sale is due to be finalised later this spring and is subject to approval from regulators, including the Russian central bank and tax authorities. Approval from sanctions authorities in the US and EU may be required too. Before the Russian invasion of Ukraine, the bank had a book value of $10.6bn.

Fridman and Aven declined to comment. Kosogov confirmed a sale had been agreed, declining to comment further.

The transaction is “a beautiful deal on paper” because, with the deal between Kosogov and the Cypriot entity, none of the parties are under sanctions, one of the people with knowledge of the matter said.

“Fridman and Aven escape sanctions, Kosogov gets the bank, and the bank has one single Russian shareholder”, the person said.

Finalising the deal could be difficult because of the complexity of obtaining regulatory approval in multiple jurisdictions, two of the people cautioned however.

The oligarchs, who have challenged the EU sanctions in court, have submitted letters of support from Russian opposition figures such as jailed war critic Ilya Yashin and Leonid Volkov, the head of jailed opposition leader Alexei Navalny’s Anti-Corruption Foundation. The letters have caused a stir in Russian opposition circles, prompting Volkov to say that signing them was a “big political mistake.”

More than two dozen Russian oligarchs have launched legal challenges against western sanctions. A few, including Fridman’s ex-wife and the mother of Yevgeny Prigozhin, the head of the Wagner mercenary group, have won court decisions against EU sanctions deemed to fall short of the bloc’s criteria for such measures.

The Alfa-Bank sale is also designed to ease pressure on the bank in Russia, where the Kremlin’s counter-sanctions against “unfriendly countries” have created difficulties for Alfa’s governance and ability to access state funding, the people said.

Aven left Russia shortly after attending a roundtable with Putin on the day the war broke out, and has yet to return. Fridman continues to live in the UK. He owns a £65mn home in north London.

In a filing released last month, before the EU sanctioned Alfa-Bank, ABH Financial Limited, the Cyprus-based company, said it was urgent “to dispose of this controversial asset in order to avoid further regulatory, political and reputational implications.”

Owning the bank was “toxic” for its beneficiaries, who were “keen to maintain their status of international investors,” ABH Financial said in the filing. Italian lender UniCredit and a cancer foundation run by a former Alfa-Bank top executive hold stakes in the Luxembourg-based company controlling the Cyprus company, alongside Fridman, Aven and Kosogov.

The former head of Alfa’s investment unit, Kosogov had the smallest stake and quietest public profile of the five businessmen until last March, when the UK and EU sanctioned Fridman, Aven, and their partners German Khan and Alexei Kuzmichev.

Khan and Kuzmichev gave their stakes in the Luxembourg company to Kosogov, boosting his stake to 41 per cent, as well as their shares in LetterOne, the London-based investment vehicle the oligarchs founded in 2013.

UniCredit declined to comment. Alfa-Bank and its ABH Financial did not respond to requests for comment.

Additional reporting by Anastasia Stognei in Riga, Henry Foy in Brussels, and Owen Walker in London