Raiffeisenbank International (RBI) is coming under enormous pressure over its Russian operations. Last year, the Moscow subsidiary paid a record 464 million euros in taxes to Putin’s coffers and is looking to hire 2,400 employees. The US and the ECB are pushing for an exit, otherwise there is even a risk of fines.
Criticism of the RBI is increasing; at Thursday’s shareholder meeting there were even protests in front of the company’s headquarters in Vienna. These were fueled by the latest figures: according to the ‘Financial Times’, the RBI Russia has transferred a whopping 464 million euros in taxes to the financial department in Moscow for 2023, which was much more than all other foreign financial institutions paid together. This would help finance Putin’s war, the Ukrainian government complained a while ago and threatened sanctions.
A third of the group’s profits come from Russia
The record tax payment was partly due to the fact that Raiffeisen earned 1.3 billion euros there. That was about three times as much as before the war and one-third of RBI’s total consolidated profits. Added excitement: The Moscow subsidiary is currently looking to hire approximately 2,400 new employees, mainly in sales and customer service, for its 124 branches and 2.3 million customers.
That does not fit at all with the exit plans that bank boss Johann Strobl has announced. Only since last year has it been officially said that a sale or spin-off of the subsidiary is being considered. The most recent idea was a complicated exchange.
Strabag deal for 1.5 billion euros very controversial
The RBI Russia should have bought oligarch Oleg Deripaska’s shares in the domestic construction company Strabag for 1.5 billion euros. These shares would then have been transferred to the RBI parent company. In this way, Raiffeisen could have at least brought most of the profits that had been frozen in Russia for years to Austria despite EU sanctions. But US authorities immediately expressed concern because Kremlin loyalist Deripaska himself was blacklisted. And ultimately, Vladimir Putin would have to personally agree to such a delicate deal.
However, time is running out for RBI boss Strobl: Because no clear progress has been made for too long, the European Central Bank (ECB) recently demanded that business with Russia be reduced by 65 percent within two years, otherwise there would be a risk there are painful punishments.
According to Strobl, something has already been done. Since 2021, the number of branches has been reduced from 132 to 124 and the volume of loans granted has been reduced by 56 percent. To maintain a banking license one must remain in business, and the RBI, as the largest Western financial institution in Russia, also looks after many international business clients that one does not want to abandon.
And it is very difficult to part with such a profitable investment: this year, RBI earned a total of 664 million euros in the first quarter. Without the subsidiaries in Russia (and Belarus), there would have been only 333 million, or half.
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.
