Court ruling soon – dispute with Russia: RBI threatens to pay billions

The Viennese construction group Strabag, its Austrian core shareholders and the Russian subsidiary RBI are affected.

If the lawsuit is successful, it is likely to have a significant impact on the balance sheet of the Russian subsidiary RBI. This is likely to have an impact on RBI’s consolidated balance sheet as corresponding provisions would be required.

RBI: Difficult to estimate the extent of damage
It remains to be seen whether the court will actually rule that day or later. In its third-quarter report, RBI said that if the lawsuit were successful, it would have a “significant negative impact on the balance sheet.” However, no provisions were made during the reporting period because it was difficult to estimate the extent of the damage, the report said. The bank plans to take legal action against a negative ruling, which would delay payment.

RBI is very well capitalized and prepared for all eventualities, said Michael Höllerer, member of the supervisory board of RBI, main shareholder of RBI, Raiffeisenlandesbank Wien-Niederösterreich, recently on Ö1 radio. He hoped doors would reopen after some were closed for geopolitical reasons.

The ECB and the American sanctions authorities are putting pressure on it
The RBI is under pressure from the European Central Bank (ECB) and the US sanctions authority to reduce its activities in Russia. Since the beginning of the war in Ukraine, options for withdrawal have been explored, so far without success. RBI boss Johann Strobl recently promised a majority sale. However, the bank’s hands are currently tied as the Russian court prohibits the sale of the subsidiary.

According to its own statements, the RBI is not directly involved in the process and is not accused of any wrongdoing. However, it is likely that the Russian subsidiary will play a role as leverage in the proceedings. At the heart of the dispute: Rasperia, long attributed to sanctioned oligarch Oleg Deripaska, accuses Strabag and its core shareholders of making their shares in the construction company worthless as a result of the sanctions. Rasperia owns 24.1 percent of Strabag after it was diluted by a capital increase among the blocking minority. RBI’s Russian subsidiary is named in the lawsuit as related to the other defendants, although the bank itself does not hold shares in Strabag. These are owned by one of RBI’s core shareholders, Raiffeisenlandesbank Niederösterreich-Wien.

In addition to the RBI, the ECB recently urged Bank Austria’s parent company, Unicredit, to maintain additional capital as a buffer against potential risks from its Russian operations. From 2025, the RBI’s capital requirements would increase, a spokesperson said in November. The company there recently collapsed.

Profits frozen in Russia
RBI has been active in Russia for more than thirty years and is, next to Italy’s UniCredit, the largest Western bank in the country. In the spring, the financial institution had to abandon a plan to transfer money from Russia through a complex transaction. In the first nine months of 2024, RBI generated more than half of its consolidated profit of €2.1 billion in Russia. Due to the sanctions, the RBI does not have access to these funds. According to an insider, there is now almost six billion euros of equity tied up in Russia.

In concrete terms, the RBI wanted to acquire the frozen Strabag share in Russia for approximately 1.1 billion euros. What role Deripaska would have played in this deal remained unclear. To this day, the ownership structure is not clear. According to RBI boss Strobl, the bank had found a solution that complied with the sanctions, but had to abandon the project under pressure from the US Treasury Department. A number of the companies involved were subsequently sanctioned for allegedly evading sanctions.