Raiffeisen at the forefront

How Western banks are financing Putin’s war chest

Ukraine recently placed the RBI on the red list of war supporters - it was only removed after intervention from Austria.

(Bild: APA/HERWIG G. HOELLER)

Despite all the sanctions, Russia is successfully navigating its way financially through the war of aggression in Ukraine. Western banks are also making this possible - with Raiffeisen Bank International (RBI) leading the way. Research now shows that the levies for the banks have quadrupled since the start of the war.

RBI has long struggled to get out of its former cash cow, the Russian business, and now the exit is proceeding extremely slowly. The Financial Times now shows just how much this is contributing to the financing of the aggressor. According to the report, those Western banks that are still active in Russia paid more than 800 million euros in taxes in 2023.

Moral dubiousness pays off
And RBI in particular apparently contributed a significant chunk - it holds the largest shares in Russia in terms of assets of the largest European banks. Also listed are UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP. In financial terms, their morally questionable retention hardly seems to be hurting them; in 2023, they posted a total profit of more than three billion euros - three times as much as in 2021.

Some of the money came from funds that the banks can hardly withdraw from the country. The enormous jump in profits then led to the equally massive increase in tax payments - which amounted to 200 million euros before the crisis, according to an analysis by the Financial Times.

The Raiffeisen International file
The "Financial Times" already showed last year how large RBI's share of the payments is - and it is indeed huge: of the foreign lenders in Russia, it has the largest local presence. RBI's Russian profits more than tripled to 1.8 billion euros between 2021 and 2023 - this corresponds to more than half of the banking group's total profit.

Before the war, the share was around a third. In addition to the regular tax levies in 2023, RBI paid a further 47 million euros due to a special levy imposed by the Kremlin on some companies last year.

No imminent exit from Russia in sight
RBI's withdrawal plans are also not going down particularly well internationally. The business was recently a thorn in the side not only of the US authorities, but also of the European Central Bank. In particular, the fact that the impression was created - for example through numerous job advertisements - that the bank was even planning to expand its involvement caused displeasure.

According to the Financial Times, the bank apparently had ambitious plans for a "multiple expansion of its active customer base". Nevertheless, the RBI has recently managed to reduce its loan portfolio by 56 percent since the beginning of 2022.

Banks as a financial lifeline
However, it is not only European banks that are continuing to pay diligently into the Russian state coffers - US credit institutions such as Citigroup (USD 149 million profit; USD 53 million taxes) and JPMorgan (USD 35 million profit, USD 6.8 million taxes) are also still firmly in business with Russia, according to the Kyiv School of Economics.

What the report shows in any case: Western banks have hardly been harmed by the sanctions so far, but have actually benefited from the restrictions on the Russian financial sector (such as being excluded from the international payment system SWIFT). They now act as a financial lifeline between Moscow and the West.