More than two years after the invasion of Ukraine, 21 international banks are still operating and making money in Russia, to a total of $3.5 billion in 2023, according to a Kyiv School of Economics (KSE) study published on Wednesday, April 24. These profits have also generated $970 million in revenue for Russian tax authorities, representing additional resources for the state budget and therefore, potentially, for financing the war effort.
Among banks cited in the KSE study are American heavyweights Citibank and Italian UniCredit, as well as lesser-known names such as Hungary's OTP and Austria's Raiffeisen Bank International, by far the most exposed.
Established in most of the former communist countries of Central and Eastern Europe for over 30 years, Raiffeisen has developed a significant network of retail banks in Russia, to the point of being included in the list of systemically important institutions drawn up by the Central Bank of Russia. This strong presence is reflected in the company's financial results: in 2023, its Russian activities still generated over €2.6 billion in revenues and €1.34 billion in profits, or 52% of its total earnings.
Sincerity called into question
For Raiffeisen, as for the other banks targeted, profits generated in Russia are not in themselves illegal, in the absence of a total embargo against the country. Nicolas Véron, an economist at the Bruegel Institute in Brussels and the Peterson Institute for International Economics in Washington, pointed out that "if European banks remain [in Russia], it's because European companies are continuing to trade with the country. It remains to be seen whether banks need a presence in retail banking. One can pursue commercial transactions with banks in Russia without necessarily providing retail banking services to Russian army soldiers and their veterans."
Since the beginning of the conflict in Ukraine, Raiffeisen has maintained that it's seeking the best way to withdraw from the Russian market. However, it is not willing to accept a costly exit, unlike, for example, France's Société Générale, resigned to a loss of €3.1 billion when it sold its Rosbank subsidiary.
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 referring to a target of "double-digit revenue growth." The bank told the British daily that these targets had not been updated since the outbreak of war.
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