US Warns Raiffeisen Over Business with Russia

The U.S. Department of the Treasury has warned Raiffeisen Bank International (RBI) that its access to the U.S. financial system could be restricted due to its business dealings with Russia, according to a source who has seen the correspondence.

Deputy U.S. Treasury Secretary Wally Adeyemo sent a letter to RBI on May 6 expressing concern over the bank’s expansion in Russia, as well as a $1.5 billion contract with a sanctioned Russian oligarch that the bank has since rejected, the anonymous source claims.

Although Raiffeisen withdrew from the contract related to Russian oligarch Oleg Deripaska a few days after the letter arrived, the source says that the U.S. Treasury remains concerned about Raiffeisen’s operations in Russia.

This is the strictest warning yet for the largest Western bank in Russia, following months of pressure from Washington, which has been investigating the Austrian lender’s operations in the country for over a year.

Reuters reported in March on strong U.S. opposition to Deripaska’s transaction, which Raiffeisen presented as a means to unlock some of its blocked funds in Russia.

A Raiffeisen spokesperson stated that the bank has withdrawn from that business and has not engaged in such transactions. They also announced that RBI has “significantly reduced” its activities in Russia and initiated broad measures to mitigate sanction risks.

– RBI will continue to work on the deconsolidation of its Russian subsidiary, the spokesperson told Reuters.

Meanwhile, U.S. officials warn that RBI’s actions increase the risk of measures to restrict its access to the U.S. financial system, given concerns that its behavior threatens U.S. national security.

The United States is the most powerful regulator in the world primarily because it can cut off access to the dollar, the cornerstone of international finance. Losing access to the dollar would likely push any bank into crisis.