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3 May, 2024 09:37

Top EU bank sets timescale for promised Russia exit

Raiffeisen Bank will start a sharp reduction of its Russian business by the end of this year, its CEO has announced
Top EU bank sets timescale for promised Russia exit

Austria’s Raiffeisen Bank International (RBI), one of the last major Western lenders in Russia, will start its withdrawal from the country in the third quarter of this year following pressure from the EU regulator, CEO Johann Strobl announced on Thursday.   

The Vienna-based lender said in April it was expecting to receive a request from the European Central Bank (ECB) to speed up its business reduction in Russia. The ECB’s draft of the requirements demands that RBI slash loans to customers by a further 65% by 2026 and “significantly” decrease international payments originating from Russia.  

“The expectation is that implementation will begin in the third quarter. We’ll now draw up the plan and analyze what we can do and what the impact will be,” Strobl said during a conference call.  

RBI earlier described the ECB’s proposals as going “far beyond RBI’s own plans,” adding that they could “adversely impact” the lender’s attempts to sell its Russian division.  

According to the group’s first quarter earnings report published on Thursday, the lender has reduced its customer loans in Russia by 58% since its peak in 2022 to €5.8 billion ($6.2 billion). The bank also recorded net income of €644 million ($691 million) in the first three months of the year, with about half of that profit coming from operations in Russia and Belarus.  

“We’re taking a careful approach, we’re not scaling back our business in Russia very quickly and are trying to preserve the asset’s value to be able to sell it,” Strobl explained.  

RBI has long been resisting demands from the US and EU to speed up its Russia exit, while Austrian officials have expressed hope of reviving relations with Moscow after the conflict in Ukraine ends, according to Reuters.    

In its latest report the bank said it continues to work on selling or spinning off its Russian subsidiary, noting that both options require approval from Russian and EU authorities.  

“The process is therefore not entirely in RBI’s own hands,” making it difficult to put a date on a complete Russia exit, the report said.  

RBI is one of the few foreign banks to have stayed in Russia despite sanctions imposed by Western countries since the start of the Ukraine conflict in 2022. The lender plays an important role in the Russian economy, enabling euro and dollar payments to and from the country.