Raiffeisen Delays Withdrawal from Russia Despite Pressure from EU Regulators

Raiffeisen, the Austrian banking group and one of the few major Western lenders operating in Russia, has announced a delay in its planned withdrawal from the country, despite mounting pressure from European Union (EU) regulators. According to Reuters, officials in Vienna have defended the bank’s longstanding ties with Moscow, highlighting its significant role in the Russian economy and its importance in facilitating euro payments to and from the country.

Raiffeisen is one of only two foreign banks listed among the Russian central bank’s 13 systemically important credit institutions, the other being Italy’s UniCredit. The Austrian lender had initially announced its intention to spin off its Russian business by September, following pressure from Western authorities. However, the RBI Group, which owns Raiffeisen, has resisted demands from the US and the EU to expedite its exit from the Russian market. Austrian officials expressed optimism about the possibility of restoring relations with Moscow once the conflict in Ukraine is resolved.

While Austria publicly supports Ukraine, Reuters reports that several officials have voiced reluctance to sever decades-old ties with Russia entirely. The country hopes to maintain relations with Moscow, considering the possibility of restoring them in the future. Raiffeisen, Austria’s second-largest credit institution, has faced growing pressure from Western officials and investors in recent months. The European Central Bank (ECB) reportedly urged the bank to withdraw from the Russian market, while the RBI Group has faced scrutiny from the US and the EU over potential violations of Western sanctions.

In response to pressure from Washington, Raiffeisen has reportedly provided transaction data on Russian operations to the US Treasury Department’s Office of Foreign Assets Control (OFAC). However, Austrian officials have claimed that the bank has been unfairly targeted, stating that other EU banks are also active in Russia. They argue that abruptly leaving a country of operation is not a feasible approach.

Despite the ECB’s pressure, Raiffeisen has not yet presented its plans to the regulatory body, making a September withdrawal from Russia unlikely, according to Reuters. The presence of RBI in Russia underscores the deep ties between Austria and Russia, which extend to areas such as gas pipelines and finance, with Vienna serving as a significant hub for financial activities involving cash from Russia and its former Soviet neighbors.

Raiffeisen had previously warned that exiting its highly profitable business in Russia would lead to a decline in income generated by Raiffeisen Bank Russia and would impact RBI’s customers. Senior executives from Raiffeisen had indicated that the spin-off process would take between four to seven months.

With approximately 2,600 corporate customers, 4 million local account holders, and 10,000 employees in Russia, Raiffeisen’s presence in the country remains significant, despite the ongoing pressures to withdraw. The bank’s decision to delay its exit reflects the complexities and challenges associated with disengaging from a market where it has established a strong presence over many years.