Today’s News

A Russian court has frozen the shares of Raiffeisen Bank International’s (RBI) local subsidiary, blocking the sale of the bank’s Russian unit and intensifying tensions between Moscow and the West.  

Austria-based RBI, the largest Western bank still operating in Russia, had committed to spinning off its Russian business amid pressure from international regulators. However, more than two years since the conflict between Russia and Ukraine began, little progress has been made on this front. 

A spokesperson for Raiffeisen stated that while the Russian court’s decision prevents the sale of the bank, it does not affect its operations in Russia or the European Central Bank’s demands to downsize the business. 

“We can still appoint management and give instructions to the Russians but we cannot sell the bank,” they said. RBI plans to challenge the court ruling, which marks the most significant freeze involving a Western bank in Russia. 

Though Italy’s UniCredit also faces pressure to exit Russia, RBI’s larger presence has become a test of the West’s determination to sever economic ties with Russia. With 2,600 corporate clients, 4 million local account holders, and 10,000 employees, RBI is crucial for facilitating international payments in Russia—a role the Russian authorities want it to maintain. 

Western regulators, however, are pushing for a different outcome. The European Central Bank is urging RBI to reduce its business in Russia, as the bank remains a vital channel for millions of Russian customers transferring euros and dollars abroad. With over 18 million customers from Vienna to Moscow and 44,000 staff, Raiffeisen serves as a critical financial hub for Austria and much of Eastern Europe. 

Raiffeisen’s Legal and Sanction Challenges 

The freeze on Raiffeisen’s shares is linked to a recent claim by Russian investment holding company Rasperia against Strabag and its Austrian shareholders, including the Raiffeisen unit. Although the bank is not accused of any wrongdoing, it has found itself entangled in the legal dispute. 

The bank had previously attempted to purchase a stake in the Vienna-based construction group Strabag from a company linked to Oleg Deripaska, a Russian billionaire who has denied any current association with Strabag and has dismissed Western sanctions against him as baseless. 

The U.S. Treasury noted in May that a Russian company, Iliadis, was set up to acquire Rasperia, which held Deripaska’s frozen shares. This move has further complicated RBI’s position, especially since the U.S. Treasury’s Office of Foreign Assets Control had already launched an investigation into Raiffeisen’s Russian activities in early 2023.  

Due to the pressure from Washington, Raiffeisen this year abandoned plans to purchase the Strabag stake, a deal initially aimed at releasing bank funds that are currently frozen in Russia. 

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