Increasingly fierce criticism

Raiffeisenbank paid 464 million euros to Putin

RBI is by far the largest Western bank in Russia.

(Bild: APA/AFP/Alexander Nemenov)

Raiffeisenbank International (RBI) is coming under massive pressure because of its business in Russia. Last year, the Moscow subsidiary paid a record 464 million euros in taxes to Putin's state coffers and is looking for 2,400 employees. The USA and the ECB are pushing for an exit, otherwise there is even the threat of penalties. 

Criticism of the RBI is becoming increasingly fierce, and there were even protests outside the company headquarters in Vienna at the shareholders' meeting on Thursday. These were sparked by the latest figures: According to the Financial Times, RBI Russia transferred a whopping 464 million euros in taxes to the tax authorities in Moscow for 2023, which was far more than all other foreign financial institutions combined. A while ago, the Ukrainian government complained that this was helping to finance Putin's war and threatened sanctions.

A third of group profits from Russia
The record tax payment was also due to the fact that Raiffeisen earned 1.3 billion euros there. That was around three times as much as before the war and a third of RBI's total Group profit. Additional excitement: the Moscow subsidiary is currently advertising for around 2,400 new employees for its 124 branches and 2.3 million customers, mainly for sales and customer service.

This does not fit in at all with the exit plans announced by bank boss Johann Strobl. Since last year, it has only been officially stated that a sale or spin-off of the subsidiary is being examined. The latest idea was a complicated swap.

Strabag deal for 1.5 billion euros highly controversial
RBI Russia was supposed to buy the oligarch Oleg Deripaska's shares in the domestic construction group Strabag for 1.5 billion euros. These shares would then have been transferred to RBI's parent company. This would have at least allowed Raiffeisen to bring the majority of the profits that had been frozen in Russia for years to Austria despite EU sanctions. However, US authorities immediately raised concerns because Deripaska, who is loyal to the Kremlin, is himself on the blacklist. And ultimately, Vladimir Putin would first have to personally approve such a delicate deal.

However, time is running out for RBI CEO Strobl: because nothing has progressed recognizably for too long, the European Central Bank (ECB) recently demanded that the Russian business be reduced by 65 percent within two years, otherwise painful penalties would be imposed.

RBI CEO Johann Strobl: The credit volume has already been reduced by 56 percent.

(Bild: APA/HANS KLAUS TECHT)

According to Strobl, something has already been done. Since 2021, the number of branches has been reduced from 132 to 124 and the volume of loans granted has been cut by 56 percent. In order to maintain the banking license, it is necessary to remain active, and as the largest Western financial institution in Russia, RBI also serves many international corporate customers that it does not want to abandon.

And it is very difficult to part with such a profitable investment: This year in the 1st quarter, RBI earned a total of 664 million euros. Without the subsidiaries in Russia (and Belarus), the figure would have been only 333 million, i.e. half.