© Reuters. A man carries bottles with water outside the regional administration building, which city officials said was hit by a missile attack, in central Kharkiv, Ukraine, March 1, 2022. REUTERS/Vyacheslav Madiyevskyy
By Alexandra Schwarz-Goerlich, John O’Donnell and Francesco Canepa
VIENNA/FRANKFURT (Reuters) – Austria’s Raiffeisen Bank International (RBI) is looking into leaving Russia, two people with knowledge of the matter told Reuters, a move that would make it the first European bank to do so since the country’s invasion of Ukraine.
Such a decision, which could see one of central and eastern Europe’s biggest banks quit both Russia and Ukraine, is not imminent, but could be triggered if its businesses in those countries need further cash or capital, one of the people said.
RBI has operated in Russia since the collapse of the Soviet Union thirty years ago and its business there – Russia’s No. 10 bank by assets – contributed almost a third to the group’s net profit of 1.5 billion euros ($1.7 billion) last year.
The contingency plan shows how some foreign businesses with operations in Russia are scrambling to adjust to heavy sanctions imposed on Moscow by the West, and to the ensuing turmoil that has gripped Russian markets. Energy giants BP (LON:BP) and Shell (LON:RDSa) are among companies looking to reduce ties with Russia.
Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.
A second person said RBI could exit Russia and Ukraine by handing over ownership to another entity, without giving details. A temporary suspension of activity was also an option, that person said.
Russia’s Prime Minister Mikhail Mishustin has said Moscow would temporarily curb foreigners seeking to sell assets, complicating any attempts to quit the country.
A spokesperson for RBI in Vienna declined to comment.
RBI’s Russian business said in a statement: “Raiffeisenbank plans to secure uninterrupted availability of its financial services for the clients based on existing legislation and the regulator’s orders.”
The potential cost to RBI of quitting Russia and Ukraine is unclear. Both sources said it was financially robust enough to withstand any stoppage of its banking operations there.
The second source said any decision to leave Russia would have to be done in coordination with the central bank, which might impose its own conditions.
Austria’s finance ministry said this week that RBI was “well positioned for all eventualities.”
RBI has invested 2.4 billion euros in its Russian subsidiary, which had assets worth 11.96 billion euros at the end of last year.
Writing off both would cut just over 100 basis points off the group’s Core Equity Tier 1 ratio – a key gauge of financial strength – of 13.14%, according to Reuters calculations.
That does not take into account any profit from bets the bank has made against the rouble as a 1.4 billion euro “hedge” against its exposure to the currency, which would reduce the capital hit.
On top of that, RBI’s full-year results presentation shows it had an exposure of 1.6 billion euros to Russia and 170 million euros to Ukraine, which it said was mainly booked via its corporates and markets unit at the group level.
($1 = 0.8950 euros)
Exclusive-Raiffeisen looks at leaving Russia after Ukraine invasion – sources