During the war, business continued. This is what is being criticized, with increasing insistence, Raiffeisen Bank International (RBI), the main Austrian bank, very present in Russia.

The value of its assets in this country has increased by 40% between January 2022 and March 2023 to reach $ 29 billion, noted the British daily Financial Times in an article published Sunday, September 3.

Russian profits on the rise

In addition, the profits that Raiffeisen Bank's subsidiary in Russia recorded rose sharply – by almost 10% – in the first six months of 2023, according to the Financial Times. "Why does this Austrian bank continue to make so much money in Russia?" asks the Süddeutsche Zeitung.

International sanctions and pressure on large Western groups present in Russia have pushed a number of these actors to withdraw since the beginning of the major Russian offensive in Ukraine in February 2022. French banks, such as Société Générale or BNP Paribas, have thus offloaded their Russian assets, even if it means suffering billions in losses on this occasion, recalls the magazine Le Point.

Raiffeisen Bank, for its part, has increased the number of its employees in Russia, which now reaches almost 10,000 people against 9,000 before the conflict, according to the website The Banker. Enough to push the Ukrainian authorities to place several RBI officials on a list of "people to be sanctioned", including its CEO, Johann Strobl.

The presence of the RBI in Russia is also making waves in the small hushed circle of bankers. At a conference on international finance in Tyrol, Strobl was roundly challenged by the public about the Austrian bank's Russian affairs, the Süddeutsche Zeitung reported.

It must be said that the head of the RBI had announced in March that he would somehow leave Russia in September. Then, during the summer, bank officials acknowledged that it would still have to wait a little, without giving more details on a possible new deadline, notes the Reuters news agency.

For its part, Raiffeisen Bank is sharpening its arguments to counter criticism. Contacted by France 24, it points out that between the second half of 2022 and that of 2023, the value of its Russian assets has declined. She adds that the number of loans to Russian customers has almost halved. The divestment process would therefore be well and truly underway.

Historical presence in Russia

Above all, the Austrian bank deplores being constantly cited as an example of the Western bad students still present in Russia. It is true that other companies are in the same situation, and there is even a list of Western companies still active in Russia, regularly updated by Yale University. "We found that there were many companies that promised to leave, but that in reality, it was not always followed up. Or they were not real withdrawals, but rather, for example, a freeze on new investments," said Benjamin Hilgenstock, an expert on international sanctions against Russia at the Kyiv School of Economics.

Nevertheless, the RBI stands out. Because there are "few Western banks that had a significant presence in Russia before the war and Raiffeisen Bank was clearly the most important," said Kirill Shakhnov, an international finance specialist at the University of Surrey who has written about the impact of sanctions against Russia. The other two main Western banks to have bet big on Russia are the Italian UniCredit and Hungarian OTB Bank groups... both are also still present in Russia.

The local subsidiary of the Austrian bank is even among the ten largest banks in Russia and "is considered a systemic institution for finance in Russia," adds finance specialist Kirill Shakhnov. This is no small achievement because "the Russian banking sector is highly concentrated and leaves little room for foreign players," said Kim Kaivanto, an economist at the University of Lancaster.

In fact, the RBI is a bit of a first to arrive and the last to want to leave. It began investing in Russia in 1996 and has since continued to spend lavishly to gain market share, summarizes the Financial Times. Result of the races: "Operations in Russia now account for nearly 60% of the bank's profits worldwide," says Kirill Shakhnov.

The bank of international transactions between Russia and the world?

It is difficult to cut yourself off from such a market. And the war in Ukraine seems to have further improved the bank's business. First, "because it was able to recover customers of other Western banks who quickly left," said Tyler Kustra, an expert on international economic sanctions at the University of Nottingham.

Then, "like all Russian subsidiaries of Western groups, the RBI is not subject to the sanctions regime. It still has access to international banking networks where it was able to borrow money at very low rates last year and then make lucrative loans in Russia where rates had exploded because of the war," Shakhnov said.

Finally, the war seems to have made the RBI a key player in what remains of international transactions between Russia and the West. "Since most Russian banks are on sanctions lists, it is necessary to find financial intermediaries to manage the payment of purchases of Russian natural gas by European countries, for example. And apart from the Raiffeisen Bank, there are not many people," Shakhnov said.

The Financial Times assured in March that the RBI now manages nearly 50% of Russian international transactions. This would make it an essential cog in bringing money into Russia and, therefore, financing the Russian war effort.

An estimate vigorously contested by the Raiffeisen Bank, which maintains to France 24 that the bank "certainly does not manage up to 50% of financial transactions between Russia and the rest of the world". It points out, moreover, that this share has only fallen since the publication of the Financial Times article.

The price to pay

Being constantly put on the spot and having to defend oneself "is the price to pay for a company that decides to do business in authoritarian countries," says Benjamin Hilgenstock. There may be some hell of a snake to swallow for those who "look at the market share of those who leave," says Alexander Mihailov, an economist at the University of Reading who has written about the Russian monetary sector.

Thus, the RBI found itself in very murky media waters for granting repayment terms to its indebted Russian customers who had to fight on the front. The bank may have replied that it was a legal obligation, "no one forces it to stay," notes Benjamin Hilgenstock.

But leaving is not easy either. "The RBI is stuck," says Austrian daily Der Standard. Moscow has, in fact, enacted measures during the year 2022 to "make as painful as possible any withdrawal from Russia by a company," said economist Kim Kaivanto. The agreement of the Russian authorities, including President Vladimir Putin, must be obtained in the event of a sale of the assets. In other words, to get the Russian green light, you have to accept the Kremlin's conditions. Prospective departures must also pay an additional fee. "Russia hopes that these measures will push Western companies to try to pressure their governments to ease sanctions on Russia," Kaivanto said.

In the case of Raiffeisen Bank, packing up and giving up its Russian activities "would more or less amount to financial suicide," says Kirill Shakhnov. This is why the bank's officials seem determined to postpone this promised withdrawal indefinitely. "They hope that the war will soon be over, which would allow them to stay," Reuters said.

In the meantime, the Austrian bank's officials have their eyes riveted on... Washington — The U.S. began looking into the RBI's Russian activities in February. And if the Americans believe that the bank is violating the sanctions regime against Russia, they could ban the bank from transacting in dollars... Enough to sign the death warrant of this bank.

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