Raiffeisen International, Austria’s second-largest bank, generated almost half its profits from Russian operations this year and still has €7 million in loans to Russian soldiers outstanding as part of a Kremlin debt forgiveness scheme.
A spokesperson said the bank is working on two options to leave the Russian market – a sale or a spin-off – and pointed to a reduction in its Russian loan book to €6.3 billion, down from €13 billion in 2022.
It’s a tricky position to be in, but also a lucrative one. Raiffeisen’s Russian subsidiary made a post-tax profit of over €1 billion this year, but due to Kremlin capital controls none of it can be repatriated.
A senior Raiffeisen executive told the FT in February that it handles 40 to 50 per cent of all money flows between Russia and the rest of the world. Aside from Italy’s Unicredit, it is the last big western bank still standing in the country. The spokesperson did not give a timeline for the bank’s exit.
US and Czech authorities have opened investigations into Raiffeisen over its Russian business – which pays income tax to the Kremlin – while the ECB has pressured the bank to suspend its dividend this year.
Austrian officials have responded with a robust defence of Raiffeisen’s Russian ties – some privately hope they can hold out long enough for a negotiated resolution to the war and resumption of business as usual.
Raiffeisen has been established in Russia for 25 years, and is used to weathering storms. “To think that there won’t be Russia anymore and we can decouple in all areas is delusional,” foreign minister Alexander Schallenberg told Reuters in March.
Swathes of Austrian business support his view. The Chambers of Commerce even suggested a corporate ski retreat on the outskirts of Moscow earlier this year, before local press got wind.