Raiffeisen, the Austrian banking group that is one of the last major Western lenders in Russia, is delaying its withdrawal from the country despite pressure from EU regulators, according to Reuters. The officials in Vienna have defended the bank’s long-standing ties with Moscow.
Raiffeisen is considered to play a significant role in the Russian economy as it provides a lifeline for euro payments to and from the country. It is also one of only two foreign banks on the Russian central bank’s list of 13 systemically important credit institutions, the other being Italy’s UniCredit.
Although Raiffeisen announced its plans to spin off its Russian business by September, it has been resisting demands from the US and EU to expedite its exit. Austrian officials are hopeful of restoring relations with Moscow after the conflict in Ukraine ends.
The Austrian banking institution has faced growing pressure from Western officials and investors in recent months. The European Central Bank (ECB) has urged Raiffeisen to quit the Russian market, and the RBI Group, which owns the bank, has faced scrutiny in the US and EU over potential breaches of Western sanctions.
Under pressure from Washington, Raiffeisen has transferred data on Russian transactions to the US’ sanctions authority, the Treasury Department’s Office of Foreign Assets Control (OFAC).
Austria’s second-largest credit institution has been reluctant to completely sever its decades-old ties with Russia. Despite publicly supporting Ukraine, officials believe that it may still be possible to restore relations with Moscow in the future.
The ECB’s pressures on EU banks to speed up their exit from Russia have been seen as unfair by Austrian officials. They argue that other EU banks are also active in Russia, and it is not feasible for a bank to leave a country overnight.
RBI has not yet presented its plans to the ECB, which means that an exit from Russia by September is unlikely.
The presence of RBI in Russia highlights the deep relations between Austria and Russia, which include close ties through Russian gas pipelines and finance, with Vienna serving as a hub for cash from Russia and its former Soviet neighbors.
Raiffeisen had previously warned that its decision to exit its highly profitable business in Russia would lead to a decline in income and impact RBI’s customers.
Senior executives at Raiffeisen have emphasized that a spin-off of its Russian business would take four to seven months.
RBI currently has around 2,600 corporate customers, 4 million local account holders, and 10,000 staff in Russia.
The delay in Raiffeisen’s withdrawal from Russia showcases the complexity and challenges faced by banks when navigating geopolitical tensions and regulatory pressures. The bank’s reluctance to sever ties with Moscow reflects the delicate balancing act required in maintaining relationships with both Western authorities and Russia.
Source link
