The Changing Landscape of Banking in Russia: A Look at Raiffeisen Bank International
In recent years, European and American banks operating in Russia have faced challenges due to high taxes and sanctions imposed by Western countries. According to a recent analysis by the Financial Times, these banks paid a total of 800 million euros in taxes in Russia last year, compared to only 200 million euros in 2021. One of the largest contributors to this tax revenue is the Austrian company Raiffeisen Bank International, which has the largest presence among Western banks in Russia.
In addition to European banks, large American banks such as Citigroup and JPMorgan also pay taxes in Russia. Citigroup, for example, earned 149 million dollars in Russia last year and paid 53 million dollars in taxes. JPMorgan, on the other hand, made a profit of 35 million dollars and paid 6.8 million dollars in taxes.
Foreign banks operating in Russia benefit not only from high interest rates but also from the sanctions imposed on Russian banks by Western countries. These sanctions restrict Russian banks’ access to the international payment system and increase the attractiveness of Western banks to Russian clients.
Raiffeisen Bank International saw a significant increase in its profits in Russia last year, totaling 1.8 billion euros, more than three times the amount earned in 2021. Russian activities accounted for about half of the bank’s total profits, compared to only a third before the start of the Russian invasion of Ukraine. In addition to regular tax obligations, the bank had to pay 47 million euros in extraordinary profit taxes imposed by the Kremlin on some companies last year.
Despite facing criticism from the European Central Bank and the US Department of the Treasury for its continued operations in Russia, Raiffeisen Bank International has not yet implemented its plans to withdraw from the country. The Russian Central Bank is reportedly doing everything in its power to prevent the bank from leaving, as there are few unsanctioned banks through which Russia can send and receive payments within the international SWIFT payment system.
The decision to remain in Russia is not only in the interest of Raiffeisen Bank International but also aligns with the efforts of the Russian Central Bank to retain as many banks as possible to facilitate international payments. As the banking landscape in Russia continues to evolve, it will be interesting to see how foreign banks navigate the challenges and opportunities presented in this complex market.
European Banks Paid 800 Million Euros in Taxes to Russia Last Year
Despite promises to minimize their activities in Russia, major European banks with the largest assets in the country paid a total of over 800 million euros in taxes to the Russian budget last year. This amount is ten times higher compared to the period before the Russian invasion of Ukraine, as reported by the Financial Times.
Profitability and Tax Payments
Seven European banks, including Raiffeisen Bank International (RBI), UniCredit, ING, Commerzbank, Deutsche Bank, Intensa Sanpaolo, and OTP, collectively earned over ten billion euros in Russia last year. Their profits more than tripled compared to 2021, driven by financial assets that banks cannot withdraw from Russia.
As a result of increased profitability, these banks paid 800 million euros in taxes in Russia last year, compared to just 200 million euros in 2021. Raiffeisen Bank International, the Austrian company, accounted for half of last year’s tax payments, as it has the largest presence among Western banks in Russia.
American Banks and Sanctions
American banks such as Citigroup and JPMorgan also pay taxes in Russia. Citigroup earned 149 million dollars in Russia last year and paid 53 million dollars in taxes, while JPMorgan made a profit of 35 million dollars and paid 6.8 million dollars in taxes.
Foreign banks in Russia benefit not only from high interest rates but also from sanctions imposed on Russian banks by Western countries. These sanctions restrict Russian banks’ access to the international payment system and increase the attractiveness of Western banks to Russian clients.
Raiffeisen Bank International’s Controversy
Raiffeisen Bank International’s profits in Russia exceeded 1.8 billion euros
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