The Austrian group Raiffeisen Bank International (RBI), after several months of unsuccessful search for a third-party buyer, was inclined to transfer the Russian subsidiary Raiffeisen to its own shareholders, Reuters reported, citing sources.
According to the agency, the Austrian authorities agree with such a scheme, but it may encounter obstacles from the European Central Bank (ECB) and the United States. As one of the sources explained, Washington fears that it will not be able to check the organization for money laundering.
If the scheme is approved, then RBI shareholders will receive shares in a new company registered in Vienna. This company will be given the Russian business. However, it is not clear how independent it will be from the RBI, because if the degree of independence is high enough, then new business will not fall under the direct supervision of the ECB.
Meanwhile, RBI’s spin-off of the Russian business without a sale would preserve Vienna’s and Moscow’s financial ties and at the same time protect the group from reputational damage in connection with the conflict in Ukraine, Reuters writes.
Russian Raiffeisenbank is one of the few large banks that has not been hit by Western sanctions, which allows it to carry out foreign exchange transactions without restrictions. As FT reported with reference to the words of a top manager of the bank, the organization accounts for 40-50% of all payments between Russia and the rest of the world.
Due to its presence in the country, RBI is under pressure from regulators and its own shareholders. As Reuters wrote, in March, the ECB demanded that Raiffeisen leave the Russian market, or at least submit an appropriate plan. In addition, the activities of the group in Russia are being investigated by the Office of Foreign Assets Control (OFAC) of the US Treasury, the agency reported. The RBI then stated that they were cooperating with OFAC, and expressed confidence that the responses provided would satisfy the department.
At the end of March, RBI identified two scenarios for curtailing its business in Russia – either the sale of a subsidiary of Raiffeisenbank, or the withdrawal of an asset from the group.