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Raiffeisen Bank branch in the center of the Russian capital Moscow

Photo: YURI KOCHETKOV / EPA

Austria's central bank chief Robert Holzmann sees risks in a Russian maneuver by Raiffeisen Bank International (RBI). A complex deal is planned with the Russian oligarch Oleg Deripaska. It can be assumed that the transaction is in compliance with sanctions. There are still unavoidable risks, Holzmann told the Reuters news agency.

Neither the USA, the EU nor Austria's central bank could issue a "blank check" for the deal. We can't say, go ahead, you have the green light, there is a residual risk," said the central banker. He declined to say what he specifically meant by that. In any case, the RBI has to decide whether the deal is worth it or not given the risk.

RBI is the largest western bank in Russia. Since the outbreak of war in Ukraine, she has been examining options for leaving the country. Most recently, she has focused on a sale or spin-off of the business, but no steps have been taken so far. Bank boss Johann Strobl always referred to the numerous necessary approvals, especially from Russian authorities. The Russian subsidiary bank makes hefty profits, but these cannot be transferred to Austria.

Who is behind the company Iliadis?

In order to get frozen profits out of the country, the RBI is now planning a complex transaction: It wants to buy 28.5 million shares in the Austrian construction group Strabag through its highly profitable Russian subsidiary. This share today corresponds to around 24 percent, for which the RBI would pay around 1.1 billion euros.

Until now, this block of shares was held by the Russian MKAO Rasperia Trading, which is controlled by Deripaska. However, Deripaska is subject to sanctions by the USA and the EU. Deripaska therefore no longer received dividends for his Strabag shares. The previous week, Rasperia was sold to a Russian investor called Iliadis, which the RBI says is not sanctioned. But who is behind Iliadis is unknown.

Now the RBI could come into play. Bank boss Strobl originally wanted to close the deal in the first quarter. However, recent changes in the action structure at Strabag require an extensive compliance check, the bank announced on Tuesday evening. "Subject to these reviews, Rasperia's new ownership structure should provide RBI with assurance that no sanctioned person or company will benefit directly or indirectly from RBI's announced acquisition of the Strabag shares or from any associated payments for these shares," the RBI said .

The RBI stressed that it has carefully reviewed all sanctions and maintains its assessment that the deal is fully compliant with all regulations. Nevertheless, the bank faced headwinds for the business. Senior U.S. Treasury officials urged the RBI to back away from its plans, several people familiar with the situation recently told Reuters.

They fear that Deripaska could benefit from the transaction. If the RBI goes through with the deal and then it turns out that US sanctions are being violated, the Americans could impose penalties on the bank, two of the insiders said. The harshest consequence is that they can exclude banks from the US financial system. That would call the existence of the financial institution into question.

beb/Reuters