Kostyantyn Kryvopust: “Raiffeisen Bank is reducing its business in Russia under ECB pressure”

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Konstantin Kryvopust

Raiffeisen Bank International has reduced the volume of its Russian loans and deposits by about a quarter due to the requirements of the European regulator. The European Central Bank (ECB) forced Raiffeisen to reduce its exposure in the country.

Lending to Russian customers decreased by 23% in the third quarter, which is €4.5 billion, writes Bloomberg. Deposits of customers from the Russian Federation decreased by 25% to €11 billion. Raiffeisen no longer offers time deposits to Russians and pays zero interest on current accounts, while the central bank’s base rate is 21%.

The ECB’s order comes after Raiffeisen’s attempts to exit Russia have been blocked by the government over the past two years. The two largest Western banks remaining in Russia, Raiffeisen and UniCredit, are vital channels for the Russian Federation’s external payments.

Under pressure from the European Central Bank, bank executives tried to sell local assets to minimize losses and limit potential reputational damage. However, Russia created a special commission to approve asset sales and required companies to sell assets at a discount in addition to paying an exit tax.

In September, Raiffeisen Bank International (RBI) signed an agreement to sell 87.74% of the shares of the Belarusian Priorbank and its “subsidiaries” to Soven 1 Holding Limited (UAE), completing the negotiations that were announced on February 14, 2024.

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