Austrian Raiffeisen Bank Profits from Russian Military Industry Suppliers, Bloomberg Reports

Bloomberg claims that Raiffeisen Bank International is profiting from companies supplying products to Russia's military industry, Orda reports.

One Russian chemical company, Unichim, paid over 62 million rubles ($620,000) in commission fees to the bank's Russian division last year. 

The documents specify that it supplied acids to the sanctioned company Ravenstvo, which participates in a Russian state project developing and modernizing platforms and ammunition for multiple rocket launchers and gliding bombs.

There is reason to believe the bank has other clients supplying products to Russia's defense industry.

During the first nine months of last year, Raiffeisen's Russian division earned over 1 billion euros in net profit, accounting for nearly 50% of the entire group's profit. 

The bank faces the following situation:

• Moscow's capital movement restrictions prevent access to profits
• Approximately 4.4 billion euros of its capital is stuck in Russia
• The local business, like all banks in Russia, is regulated by the Central Bank and considered a Russian legal entity under Russian law

For three years, Raiffeisen has been trying to exit Russia under pressure from American regulators and the European Central Bank.

However, such a move requires:

• Approval from a special commission
• Putin must sign off on it
• Coordination with the ECB, Austrian financial regulator, and US OFAC

If the bank finds a non-sanctioned buyer for its Russian division, it must:

• Accept a discount of at least 60% from book value
• Pay a 35% tax on the deal according to Russian law
• This means the bank would receive only a small portion of the division's theoretical value

Meanwhile, Forbes Russia reports that Raiffeisen Bank Group has reported a loss from its Russian subsidiary for the first time in years.

The group explained that it had set aside €840 million to cover legal penalty expenses in Russia, resulting in a loss of €240 million in the fourth quarter.

This also negatively impacted the group's overall profit for the past year. In January, a Russian court ruled in favor of Rasperia Trading Limited's lawsuit against Raiffeisenbank, requiring it to pay €2.044 billion.

In early November 2024, Russia's Central Bank approved an updated list of systemically important credit institutions, making no changes and keeping UniCredit and Raiffeisenbank on the list.