Raiffeisen Bank International Shares Frozen

By Emma-Victoria Farr, John O’Donnell and Alexandra Schwarz-Goerlich
FRANKFURT/VIENNA (Reuters) – A Russian court has frozen the shares of Raiffeisen Bank International (RBI)’s local arm, the largest Western bank in Russia, complicating its efforts to divest from the country.

Austria-based RBI had planned to spin off its Russian business, crucial for maintaining international payments for numerous companies, amid ongoing international regulatory pressure. However, with over two years since the onset of the Russia-Ukraine war, little progress has been made.

Following the court’s decision, RBI’s stock fell by more than 7% on Friday. A spokesperson stated that while the court ruling prevents the sale of the bank, it won’t affect its operations or its attempts to comply with the European Central Bank’s requests to downsize its Russian operations.

“We can still appoint management and give instructions to the Russians but we cannot sell the bank,” the spokesperson noted.

RBI plans to contest the court’s decision, marking the largest asset freeze of a Western bank in Russia to date. While Italy’s UniCredit also has a presence in Russia and faces similar pressures, RBI’s size has highlighted the West’s resolve to cut ties with the country.

Russian officials have expressed a desire for RBI to remain as it facilitates international transactions, as the bank serves around 2,600 corporate clients, 4 million local account holders, and employs about 10,000 staff. RBI is vital for many Russians wanting to transfer euros or dollars abroad, a situation Western regulators are keen to alter.

As RBI has extensive industrial holdings and 44,000 employees, it plays a significant role in the finance sectors of Austria and Eastern Europe. Post the Ukraine war, Russia has become increasingly profitable for RBI, generating about half of its profits from there in the first quarter of the year due to heightened international payment fees.

Sanctions and Suspensions

The asset freeze is linked to a claim from the Russian investment firm Rasperia against the construction group Strabag and its Austrian shareholders, although RBI itself is not implicated in any wrongdoing. RBI had sought to acquire a stake in Strabag from a company tied to Oleg Deripaska, who disputes any allegations against him regarding sanctions.

In May, the U.S. Treasury indicated that Iliadis was created to acquire Rasperia, which possesses Deripaska’s frozen shares, prompting investigations into Raiffeisen’s Russian operations. Following pressure from Washington, RBI has ceased efforts to acquire the Strabag stake, a move intended to enable access to otherwise frozen bank funds in Russia.