Raiffeisen Bank International (RBI) is intensifying its efforts to hand over its profitable Russian division to shareholders, amid increasing pressure to reduce its ties with Moscow, sources who wished to remain anonymous told Reuters, reports Agerpres.
Austria’s second-biggest bank is preparing for a break-up after unsuccessfully trying to find a buyer in recent months to defuse tensions over its Russia business and avoid shutting it down completely, but the latest attempts are facing obstacles, not least from the international regulatory authorities, the sources claim.
Currently, Raiffeisen is the most important Western bank in Russia, offering payment services at a time when Russians have few alternatives and Moscow is increasingly isolated after the invasion of Ukraine.
A spokesman said that Raiffeisen “will continue to consider potential transactions, which will result in the sale or demerger of Raiffeisenbank Russia”.
What are the effects?
While a split has significant support from Austrian authorities, it faces hurdles, including securing approval from the European Central Bank and getting approval from US authorities, which are investigating links between the RBI and Russia.
If a split goes ahead, RBI’s owners could become shareholders in the new Vienna-listed entity, with one share for each security they now hold.
It is not clear whether the entity will be completely independent from the RBI, a deciding factor in whether it will be supervised by Austria or the ECB.
One source explained that the split is seen as better than a sale, and a second source, close to the ECB, believes that the degree of independence of the split entity will determine who will carry out supervision.
ECB officials did not comment on the information.
A third source believes a split is more likely because any potential buyer of RBI’s Russian division would be scared off by Western sanctions, while a fourth source believes the split will allow RBI owners who do not accept Russian ties to sell their the actions.
The plan is intended to distance the RBI from Russia, but it will not be definitive. While the bank is reducing some of its activities on the Russian market, it has the obligation to preserve its operations to support its customers and its 9,000 employees, RBI claims.
The break from Belarus
Last week, a spokesman for the Austrian banking group announced that Raiffeisen Bank International will no longer process international payments in Belarus.
The RBI will cease its activities in Belarus at the end of July, as all other banks in Europe have stopped processing international payments in this country.
In recent months, the RBI has gradually limited its activities as a payment service provider in Russia, with the aim of eventually ceasing operations in the Russian market.
In late March, RBI chief executive Johann Strobl told shareholders that the Austrian bank would consider a possible sale or spin-off of its Russian business. According to Strobl, Raiffeisen will continue to reduce its activities in Russia while it evaluates its options, but will maintain some operations in the idea of being able to keep its banking license.
Raiffeisen Bank International (RBI) has been operating in Russia since the collapse of the former USSR and is currently the tenth largest bank in Russia by assets. Last year, Raiffeisen posted a net profit of around 3.8 billion euros, thanks in large part to a two-billion-euro profit boost from its Russian business.
2023-05-23 14:01:36
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