Austria's Raiffeisen Bank International (RBI) is considering selling its highly profitable Russian business to the bank of the Russian state-owned company Gazprom after Russia's invasion of Ukraine.

Discussions about this were confirmed to the FAZ by several parties, and the supervisory board of the cooperative bank has been informed.

RBI declined to comment.

On Wednesday, CEO Johann Strobl reiterated statements made at the end of March: "We are consistently pushing ahead with the evaluation of our strategic options, which also include an orderly withdrawal from Russia." This also includes the liquidation of the bank or a reorganization with another, less capital-intensive one business model.

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

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Even if a decision has not yet been made, as Strobl said, there is much to be said for an early sale and, secondly, for a sale to Gazprombank, according to financial circles.

The withdrawal from Russia can hardly be prevented in view of the war against Ukraine.

RBI has done brilliant business in both states so far.

The reputational risks of remaining in Russia would be incalculably high for the group, which is heavily involved in Central and Southeastern Europe.

There are also financial risks.

So no one knows how and whether dividends from the local market could flow to the Viennese parent company in the future given the extended controls on capital transactions.

There is also a risk that the Russian government could nationalize the business of AO Raiffeisenbank, which recently had 3.7 million customers, as systemically important.

All of this is taking place against the background of the imponderables of the war and the resulting economic sanctions.

Strobl said it is important to secure shareholders' wealth.

He confirmed the interest of investors.

Selling is seen as an attractive option in informed circles.

Gazprombank has advantages as a potential buyer.

In this way, she could strategically supplement her business with the broad-based private customer business of AO Raiffeisenbank with 131 branches and 9,600 employees.

On the other hand, Gazprombank is not affected by Western sanctions and can handle money transactions - which would not least be important for the transfer of the sales proceeds.

It might even be possible to offset this against gas deliveries that are processed via the institute.

Along with the French Société Générale and the Italian Unicredit, RBI is one of the three Western banks with the largest activities in Russia.

Unicredit has said it is looking into the withdrawal but says it is very complex and time-consuming.

Strobl expressed himself more down-to-earth at the general meeting: "It takes time, a bank is not a sausage stand that you can close in a week."

Put an end to it as soon as possible

In the five weeks since then, Société Générale has drawn a line under its Russian business.

She sells her Rosbank to Interros Capital, which is attributed to Russian oligarch Vladimir Potanin.

SocGén writes off 3.1 billion euros, of which 2 billion euros at book value.

Analysts spoke of a "gift" to Potanin.

Such comments should be included in the consideration in Vienna.

RBI is also preparing for high write-downs on the Russian business, for which equity of almost two billion euros was on the books at the end of March.

Russia used to be the group's cash cow.

In the previous year, the subsidiary contributed around a third to the operating profit of 1.4 billion euros and 50 percent to the consolidated result.

In the first quarter, RBI from Russia posted an earnings contribution of EUR 96 million, a good fifth of the group's net profit of EUR 442 million.

This includes the loss of 41 million euros from the previously profitable Ukraine business.

RBI has scaled back its customer business in Russia.

The credit volume fell by one billion euros compared to the end of 2022 to 10.6 billion euros.

RBI entered this crisis from a position of strength, said Strobl.

Despite a quadrupling of risk provisions to EUR 319 million in a year-on-year comparison, the consolidated result is positive.

The lower equity ratio should be close to the target ratio of 13 percent again towards the end of the year.