Despite all sanctions, Russia is financially successfully managing to weather the war of aggression against Ukraine. Western banks also make this possible – led by Raiffeisen Bank International (RBI). Research now shows that levies on banks have quadrupled since the start of the war.
The RBI has long struggled to part with its former cash cow, the Russian company, and now the exit is extremely slow. The ‘Financial Times’ now shows how much this contributes to the financing of the aggressor. Accordingly, Western banks that continue to operate in Russia paid more than 800 million euros in taxes in 2023.
Moral doubt pays off
And the RBI in particular has apparently contributed a significant part: it owns the largest shares in Russia, after the assets of the largest European banks. Also listed are UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP. Financially speaking, their morally questionable stay seems to have done them little damage; They achieved a total profit of more than three billion euros in 2023 – three times as much as in 2021.
Some of the money comes from funds that the banks can hardly withdraw from the country. The huge jump in profits resulted in tax payments that also increased enormously – before the crisis they amounted to 200 million euros, according to an analysis by the “Financial Times”.
The Raiffeisen International file
The ‘Financial Times’ already showed last year how large a share of the RBI’s payments is – and that is actually enormous: of the foreign lenders in Russia, the RBI has the largest local presence. RBI’s Russian profits more than tripled to 1.8 billion euros between 2021 and 2023 – equivalent to more than half of the banking group’s total profits.
Before the war this share was around one third. In addition to regular tax levies in 2023, RBI paid 47 million euros due to a special levy the Kremlin imposed on some companies last year.
There is no imminent departure from Russia in sight
The RBI’s withdrawal plans are also not going down particularly well internationally. The transactions have recently been a thorn in the side not only of the American authorities, but also of the European Central Bank. In particular, the fact that – for example through numerous vacancies – the impression was given that they wanted to expand the commitment even further, caused dissatisfaction.
The bank apparently has ambitious plans for a “many-fold expansion of its active customer base,” the “Financial Times” continued. But in any case, the RBI recently managed to reduce its loan book by 56 percent since the beginning of 2022.
Banks as a financial lifeline
But it is not just European banks that continue to diligently pay into the Russian treasury; American credit institutions such as Citigroup ($149 million in profits; $53 million in taxes) and JPMorgan ($35 million in profits, $6.8 million in taxes) are, according to the Kiev School of Economics, still doing heavy business with Russia.
In any case, what the report shows is that Western banks have so far suffered little damage from the sanctions, but have actually benefited from the restrictions on the Russian financial sector (such as the exclusion of the international payment system SWIFT). They now act as a financial lifeline between Moscow and the West.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
