Raiffessen Bank aborts its escape route from and puts Unicredit in the crosshairs

Raiffessen Bank aborts its escape route from and puts Unicredit in the crosshairs
Raiffessen Bank aborts its escape route from Russia and puts Unicredit in the crosshairs

Raiffeisen Bank, the second largest Austrian bank after Erste, has canceled a complex share deal aimed at moving its capital out of after being examined by the European Central Bank (ECB) and the European Commission. The planned transaction would have allowed the Austrian lender to repatriate around €1.5 billion of profits retained in its subsidiary in Russia.

The escape plan involved the purchase of shares in an Austrian construction company that were previously owned by the sanctioned businessman. Oleg Deripaska., which is on the blacklist of the EU and the US for its links with the Kremlin. “In recent exchanges with the relevant authorities, Raiffeisen Bank International AG has not been able to obtain the necessary security to proceed with the proposed transaction. Out of an abundance of caution, the bank has decided to withdraw from the agreement,” according to a statement from the Vienna bank.

The proposal had been examined by regulators who warned Raiffeisen against violating the sanctions scheme against Russia for the war and invasion of Ukraine. US regulators previously indicated that violating sanctions would carry penalty risks. Germany’s economy minister was also examining the proposal, according to Bloomberg. The ECB has recently sent letters in ultimatum mode

Raiffeisen directs the largest foreign lender operating on Russian soil and has been trying to sell the subsidiary for the last two years while accumulating profits in it, something similar to what is happening to the Italian Unicredit of Andrea Orcelwhich this week presented record profits and indicated that it continues to work on reducing its Russian exposure to comply with the ECB’s instructions.

UniCreditone of Europe’s five largest banks, is among lenders that have received a letter from the ECB urging them to reduce their exposure to Russia, after Raiffeisen Bank International AG revealed last month that the regulator told it to further cut its business in Russia.

“It is likely that every bank in Europe that has some type of exposure to Russia has received the letter,” admitted its CEO, Andrea Orcel, last Tuesday in the conference with analysts, who assured that they had reduced their activity by 90%. over there. Nevertheless, Unicredit At the end of last year, it still had 3,000 employees in its Russian unit, which has more than 5% of your business. The interest margin of the Italian bank in Russia exceeded 1.1 billion euros and the volume of deposits was close to 8 billion euros.

The regulator’s letter led Raiffeisen to suspend its full-year targets and fueled speculation over whether UniCredit was given a similar ultimatum. So far, Orcel has avoided the kind of large-scale exit from Russia carried out by Societe Generale, which quickly wound down its operations by selling it to an oligarch (Potanin) who was not then on the sanctions list. Orcel assured that his bank’s strategy is in line with regulators and that he is proceeding with a plan to reduce the cross-border exposure to Russia to zero by the end of 2025.

UniCredit has taken provisions for Russia and reduced the value of its business there. The bank has reduced its cross-border exposure by 91%, while the local business has reduced branches and staff by about 20% through March 30, according to a slide presentation. UniCredit operates in Russia through its subsidiary AO UniCredit Bank, offering services to corporate and individual clients. It has around 3,100 employees and more than 50 branches. Since the start of the war, the Italian lender has set aside funds against defaults in Russia and reduced the value of his business there.

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