Raiffeisen Bank grilled by US for staying in Russia

Raiffeisen Bank grilled by US for staying in Russia
More than half RBI's profit of over €2bn in 2022 came from its Russian operations. / bne IntelliNews
By bne IntelliNews February 21, 2023

Raiffeisen Bank International, one of Austria's largest financial institutions, is facing an inquiry by the US Treasury Department's Office of Foreign Assets Control (OFAC) over its business activities related to Russia, Reuters reported, citing unnamed sources.

Raiffeisen, Italy's UniCredit and Citi of the US are among dozens of banks from “unfriendly” countries that remain unable to exit the Russian market due to the special decree of Russian President Vladimir Putin prohibiting any such deals without the special approval by authorities.

The only bank that managed to quickly pull out of Russia following the full-scale military invasion of Ukraine was France's Societe Generale, which sold its fully-owned Rosbank to oligarch Vladimir Potanin

Citi is winding down its business and reportedly is exploring options of pulling out of Russia but does not want to “simply give the asset away”. UniCredit bank so far managed to offload its loan book to local UralSib bank.

Raiffeisen's real plans are still unknown. Raiffeisen's continuous involvement in Russia could go well beyond being "trapped" in the country and simply unable to exit due to Kremlin-imposed red tape. Reportedly, the OFAC asked for clarification from Raiffeisen in January 2023 on the bank's exposure in Russia, the partially occupied Donbas, Ukraine and even Syria, including details of transactions and certain clients' activities. 

Raiffeisen is the 10th largest bank by assets in Russia, and currently it cannot withdraw any of its booming profits from its Russian business.

The analysts and legal experts surveyed by Reuters note that OFAC requesting information could be standard practice and would not necessarily lead to immediate penalties or sanctions for Raiffeisen. But, in line with the previous reports that US officials have doubled down on preventing “sanction leakage” worldwide, this could be the first warning to the Austrian bank to speed up its pullout from Russia.

Reuters reminds that Raiffeisen's importance to Russia's economy is underscored by its position as one of only two foreign banks on the Central Bank of Russia’s (CBR) list of 13 "systemically important credit institutions".

Raiffeisen Bank International (RBI) is the second-largest cross-border bank in Central and Eastern Europe by assets, and made a better than expected consolidated net profit of €3.6bn in 2022, up 164%, with more than half the profit of over  €2bn coming from its Russian operations.

Excluding Russia and Belarus, as well as a gain on the sale of its Bulgarian unit, 2022 consolidated profit was €982mn, up 35% year on year.