Raiffeisen Bank International Delays Exit from Russia

Austrian Raiffeisen Bank International (RBI) is delaying its plans to exit Russia, according to informed sources, while Austrian officials are trying to protect the bank from pressure from eurozone regulators and U.S. authorities responsible for monitoring sanctions.

RBI had planned to divest its Russian operations due to pressure from the European Central Bank (ECB) and an investigation by the U.S. Department of the Treasury examining possible sanctions violations.

Austria and RBI are actually resisting divestment, hoping that the war in Ukraine will soon end, sources said.

Austrian officials are increasingly defending the domestic bank in Europe and Washington, claiming that other Western lenders continue to operate in Russia, sources said.

RBI has not yet presented a plan to exit Russia to regulators at the ECB, two sources said, making it unlikely that it will be implemented by September.

Waiting for Approvals

The bank plans to wait for ECB approval and only then seek the green light from shareholders, which could take months, sources explain.

Additionally, the plan must be approved by the Russian central bank and the Ministry of Finance, and in the case of a sale, by Russian President Vladimir Putin.

Russian authorities have clearly indicated to RBI, which has about 2,600 corporate clients and four million savings account holders in Russia, that they want it to stay because it facilitates international payments, one source said.

A spokesperson for RBI stated that they will continue with the process of selling or divesting their Russian operations, adding that they remain committed to reducing their business in Russia.

Conflict

However, the pace of implementation of the intention to leave the Russian market has put RBI in conflict with the ECB, the competent regulator in the eurozone, which insists on the departure of not only the Austrian lender but also the Italian UniCredit.

The Italian bank declined to comment on its plans.

The ECB has suggested to RBI that due to possible issues with operations in Russia, it should not pay dividends to shareholders this year, one source said.

An alternative would be the sale of the business, which would free up four billion euros in capital for the bank. However, the search for a buyer will be complicated by uncertainty following the ‘march’ of the Wagner paramilitary group on Moscow, which has shaken the Russian business elite, the source claims.

If RBI opts for divestment, its shareholders, mostly Austrian banks, would become owners of the new company and receive one share of it for each share of RBI. Shares of the new company would be listed on the Vienna Stock Exchange.

It is still unclear whether the new company would be truly independent from RBI, which would determine whether it would be supervised by Austria or the ECB.

A source familiar with the considerations at the ECB stated in May that this would depend on the degree of connection between RBI and the new company.

Discussions with the ECB

Relevant Austrian officials support RBI and double their efforts to protect it from pressure.

The governor of the Austrian central bank, Robert Holzmann, expressed concern to ECB President Christine Lagarde about the pressure on RBI, one person familiar with the discussions said.

The Austrian central bank and the ECB declined to comment on this information.

Raiffeisen is also facing pressure from Washington and has provided the Office of Foreign Assets Control (OFAC) within the Treasury Department with data on transactions in Russia.

Raiffeisen stated that it complies with sanctions and cooperates with OFAC.

‘Austria is not an exception’

Austrian Finance Minister Magnus Brunner spoke in mid-June with the top U.S. Treasury official for sanctions, Brian Nelson, emphasizing cooperation, a source familiar with the topic said.

Another source said that the minister urged the U.S. not to subject RBI to pressure.

A spokesperson for the Austrian Ministry of Finance emphasized that other European banks also operate in Russia.

“The bank cannot leave such a country overnight,” the ministry spokesperson said, criticizing what he described as the spreading impression that Austria is an exception.

Foreign Minister Alexander Schallenberg also stated in May that many other Western banks continue to operate in Russia. RBI is an important lender in Ukraine as well, the Austrian minister emphasized on that occasion.