In Bank failures, Economics, Russia

European Central Bank, Raiffeisen Bank in Russia

By Reuters, 24 March 2023

Austrian officials are reportedly defending Raiffeisen Bank’s activities in the sanctioned country

The European Central Bank (ECB) is pressuring Austria’s Raiffeisen Bank to quit the Russian market, Reuters reported on Friday.

The ECB is not demanding that Raiffeisen leave the country immediately, fearing the financial hit it could trigger, but wants the lender to develop a plan for unwinding its business there, with one of the options being a sale or closure of its Russian affiliate, the news agency cited its sources as saying.

The pressure on Austria’s second-biggest bank reportedly comes after a top US official visited Vienna last month, and voiced concerns about the lender’s operations in Russia.

Raiffeisen, however, does not intend to present such a plan yet, Reuters said, adding that some Austrian officials see the pressure as “unwarranted foreign meddling.”

The Office of Foreign Assets Control (OFAC), a division of the US Treasury Department responsible for monitoring and implementing sanctions against Russia, launched a probe into Raiffeisen over its Russia business earlier this year, reportedly investigating potential breaches of Western sanctions by the bank.

The Financial Times claimed last week that Raiffeisen was in talks with Russia’s biggest bank, Sberbank, to exchange its profits in Russia for some of the bank’s frozen assets in Europe. Reuters reported on Friday, however, that Russian officials had denied that such talks had taken place.

Raiffeisen plays a critical role in the Russian economy, providing a lifeline for euro payments to and from the country. It’s 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.

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