Russia, an embarrassing source of profits for large international banks


A Raiffeisen bank branch, in Moscow, April 3, 2023. ALEXANDER NEMENOV / AFP

More than two years after the invasion of Ukraine, twenty-one international banks remain established in Russia and are making money there: 3.5 billion dollars (3.3 billion euros) in total in 2023, according to the count published, Wednesday April 24, by the Kyiv School of Economics (KSE), the Kiev economics school. And these profits generated $970 million in revenue for the Russian tax authorities, which represents additional resources for the state budget and, therefore, potentially, to finance the war effort.

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Among the banks cited in the KSE study are the American Citibank and the Italian UniCredit – heavyweights in the sector -, and others less known, such as the Hungarian OTP or the Austrian Raiffeisen Bank International, by far the most exposed.

Established for more than thirty years in most of the former communist countries of Central and Eastern Europe, Raiffeisen has developed a significant network of retail banks in Russia, to the point of integrating the list of systemically important establishments drawn up by the Central Bank of Russia. This strong presence can be seen in the group’s financial results: in 2023, its Russian activities still earned more than 2.6 billion euros in revenue and 1.34 billion in profits, or 52% of its total results.

Sincerity questioned

For Raiffeisen, as for the other banks targeted, the profits generated in Russia are, in themselves, nothing illegal, in the absence of a total embargo against it. “If European banks remain [là-bas]it is because European companies continue to trade with the countryunderlines Nicolas Véron, economist at the Bruegel Institute, in Brussels, and at the Peterson Institute for International Economics, in Washington. It remains to be seen whether banks need a presence in retail banking. Commercial transactions with banks in Russia can be pursued without necessarily providing retail banking services to Russian army soldiers and veterans. »

Since the start of the conflict in Ukraine, Raiffeisen has been seeking the best way to disengage from the Russian market. However, it is not ready to assume a costly exit, unlike, for example, the French Société Générale, which was resolved to a loss of 3.1 billion euros during the sale of its subsidiary Rosbank.

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The sincerity of the Austrian bank’s approach was also called into question on Tuesday April 16, when the Financial Times revealed that it had identified several dozen recruitment offers from Raiffeisen in Russia, some of which mentioned an objective of “double-digit revenue growth”. The bank explained to the British daily that the objectives mentioned had not been updated since the outbreak of war.

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