Raiffeisen Bank International Expects ECB Call to Accelerate Withdrawals from Russia
Raiffeisen Bank International (RBI) is facing increasing pressure from the European Central Bank (ECB) to reduce its business activities in Russia more rapidly. This follows a number of developments and the publication of an ad hoc announcement by the bank in which it is expected that the ECB will make an official request to accelerate the wind-down measures in the near future.
Raiffeisen Bank International can prepare itself for an increased need for talks regarding its Russian business with the European Central Bank. / Picture: © Wikimedia Commons; salech hcelas, CC BY 3.0 (https://creativecommons.org/licenses/by/3.0/deed.en)
Raiffeisen Bank International has been taking steps to minimize its presence in Russia since February 2022, but the ECB's new requirements go far beyond the bank's previous plans. Specifically, the ECB is demanding that RBI's lending volume in Russia be reduced by up to 65 percent by 2026 compared to the level at the end of the third quarter of 2023. This represents a considerable challenge, as the bank is forced to reduce loans without forgoing outstanding repayments.
In addition to the loan reductions, RBI is also expected to reduce international payments from Russia accordingly, a requirement that the bank says is relatively easy to meet. However, the main challenge lies in the credit area, which could significantly limit RBI's options to sell its Russian subsidiary AO Raiffeisenbank.
Strategic and operational challenges
RBI has already taken extensive measures to minimize the risks associated with its investment in AO Raiffeisenbank. These measures relate in particular to the capital position and liquidity as well as the increased requirements due to sanctions compliance. However, the requirements proposed by the ECB could further restrict the bank's strategic and sales policy options.
Reactions from the financial world
Florian Beckermann, as reported by ORF, board member of the Interessenverband für Anleger (IVA), emphasized that the relationship between RBI and the ECB was already strained and the new requirements could further weaken RBI's strategic position. "The surprising element of this potential reprimand shows how dynamic and challenging the regulatory landscape has become for banks with significant international operations," Beckermann said.
RBI is determined to achieve the deconsolidation of AO Raiffeisenbank through a sale of the entity, which will also require approvals from the Russian side. The situation underscores the complex challenges facing European banks, particularly in the context of geopolitical tensions and the associated economic and regulatory uncertainties.
The coming months will be crucial in determining how RBI implements the ECB's demands and what impact this will have on its further international business strategies. Analysts, investors and other stakeholders will be watching developments closely as they could have a significant impact on global financial stability and the regulatory environment.