Raiffeisen Bank International's Russian Exit Stalled as Moscow Blocks Sale

Divestment Efforts Encounter Russian Resistance

Raiffeisen Bank International (RBI), Austria's largest bank, has reportedly failed in its latest attempt to sell its stake in its Russian business. This setback comes as Russian authorities are said to have blocked the sale, driven by concerns that a local buyer could trigger Western sanctions against RBI, thereby severing a crucial financial conduit between Russia and the West. The bank has been under increasing pressure from both the United States and the European Union to reduce its significant presence in Russia following the full-scale invasion of Ukraine in 2022.

Russia's Strategic Financial Bridge

RBI's Russian operations hold a unique and critical position as the largest Western bank in Russia not currently under international sanctions. This status allows it to facilitate essential trade payments, notably for Russian gas exports to European countries, often via the TurkStream pipeline. Sources indicate that Russian officials are keen to preserve this economic link with Europe, viewing RBI as an indispensable 'gateway' for money transfers. The bank's Chief Executive, Johann Strobl, has been personally involved in multiple past attempts to negotiate a sale, highlighting the complexity and strategic importance of the situation.

Trapped Profits and Regulatory Pressure

The Austrian lender has accumulated approximately 7 billion euros in profits within Russia, funds that are currently unable to be repatriated to Austria. A key motivation for RBI's divestment efforts was the hope that a sale would unblock these substantial trapped profits. Concurrently, RBI faces stringent demands from European regulators, with the European Central Bank (ECB) reportedly requiring the bank to reduce its balance sheet in Russia by 65% by 2026, compared to its level at the end of Q3 2024. Despite these pressures, RBI's Russian unit has remained highly profitable, even engaging in investments in sanctioned Russian entities through its asset manager, Raiffeisen Capital.

Legal Hurdles Further Complicate Exit

Adding to the geopolitical and regulatory challenges, RBI's divestment plans have been further complicated by significant legal obstacles. A Russian court previously froze shares of Raiffeisen's Russian branch and ordered the bank to pay 2 billion euros in damages. This ruling stemmed from a collapsed deal involving companies linked to sanctioned oligarch Oleg Deripaska, effectively freezing any potential transfer of ownership. A Raiffeisen spokesperson confirmed that 'no transaction can currently be executed due to the freeze on shares in Russia,' while emphasizing that 'the sale process is ongoing' and the bank continues 'to wind down operations in accordance with the requirements of the European Central Bank (ECB).'