What does Raiffeisen do in Russia?
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Austria’s Raiffeisen Bank International (RBI) is the largest foreign lender in Russia.

It also plays a vital role for millions of Russian customers who want to send euros or dollars abroad, making up roughly one-quarter of euro transfers to Russia while handling up to 50% of all the money flows between the country and the rest of the world.

How much money does Raiffeisen pay to the Russian state?

Despite promises to exit Russia, Raiffeisen’s Russian profits more than tripled to €1.8bn between 2021 and 2023, making up half of the group’s total profit, compared with about a third before the full-scale invasion of Ukraine. In addition to its regular tax contributions, which amounted to €464mn in 2023, the bank paid €47mn to the Kremlin due to a windfall levy imposed on certain companies last year.

Those profits were partly generated by funds that the banks cannot withdraw from the country.

Such factors contributed to the bank’s net fee and commission income in Russia increasing threefold from €420mn in 2021 to €1.2bn in 2023. Amid this profitability, the Russian division of Raiffeisen increased employee pay by €200mn in the first half of 2023, an equivalent of €22,000 payout per employee.

Is Raiffeisen trying to leave Russia?

Since the 2022 invasion, Raiffeisen has been talking about a plan to reduce its operations or leave Russia while trying to repatriate its money.

Responding to the B4Ukraine Coalition inquiry, Raiffeisen said the delay regarding “assessing all strategic options for the future of Raiffeisenbank Russia” is due to “the complexity of the situation, including restrictive measures imposed by the Russian Federation.”

One potential €1.35bn deal linked to a sanctioned Russian oligarch Oleg Deripaska was ditched by the banking group days after the US Treasury warned it that its access to the US financial system could be curbed.

Raiffeisen says it’s working to ensure compliance with sanctions and has “significantly reduced its activities in Russia,” cutting its loan book by almost 60%. However, its headcount has climbed 7%, to nearly 10,000, its job postings suggest plans for “multiple expansion of the active client base,” in apparent contradiction to its official pledge to exit the market.

As of June 2024 — more than two years after the full-scale invasion of Ukraine — RBI is still profiting in Russia.

What are governments doing?

Although the transaction to repatriate capital collapsed, Washington’s concerns about Raiffeisen’s business in Russia persist. The US Treasury has warned that European banks face growing reputational and anti-money laundering (AML) risks when operating in Russia.

Simultaneously, the US has strengthened its secondary sanctions on banks that assist in circumventing primary sanctions against Russian entities and others involved in Moscow’s war in Ukraine. Banks could be cut off from the dollar system if they are found to be enabling sanctions circumvention. While RBI is directly affected by the first issue, it’s unclear if it is impacted by the second.

The European Central Bank (ECB) has recently intensified pressure on RBI to hasten its exit from Russia, citing concerns over the bank’s extended presence in the Russian market. In response, Raiffeisen affirmed its commitment to de-consolidate its Russian operations but underscored the legal and regulatory hurdles involved, particularly the need for approval from Russian authorities for any sale or exit strategy.

What are we calling for?

Throughout 2023 and 2024 Raiffeisen has faced many protests about its role in Russia’s war efforts. The WeMove Europe petition initiated in partnership with the B4Ukraine Coalition and BankTrack, gathered over 50,000 signatures by April 4th, the day of Raiffeisen’s Annual General Meeting (AGM).

Inside Raiffeisen’s AGM in Vienna in April, the bank’s Chairman Johann Strobl was asked by an activist about the bank’s continued Russian business and profitability.

Mr. Strobl said that the group has a “clear stance on the war in Ukraine.” “We are striving for de-consolidation. This could possibly include a sale, possibly another solution. I believe it wouldn’t serve anyone if we were to give away the bank. But that would also require approval from the Russian authorities,” he said.

B4Ukraine calls on the Board of Raiffeisen Bank to write off the bank’s Russian assets and, as other lenders have done before them, exit Russia as soon as possible — without handing over valuable assets that could be used to prolong its war against Ukraine.

Latest news

  • Austrian regulators fine Raiffeisen for money laundering lapses — Reuters
  • Raiffeisen Bank suspends euro transfers in Russia and neighbouring countries due to “restrictions imposed by correspondent banks” — BHRRC
  • US warned Raiffeisen access to dollar system could be curbed over Russia — Reuters
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