The pressure on the Austrian bank Raiffeisen to weaken ties with Russia is increasing both from Washington and the European Central Bank.
Raiffeisen Bank is under pressure from the US because of its ties to Moscow
According to the publication, Raiffeisen and Austria are at the forefront of the US global campaign to isolate Russia by tightening sanctions against the banking sector and restricting access to Western goods more than two years after the invasion of Ukraine.
In a written ultimatum sent to the bank, the European Central Bank and the Austrian government on May 8, Washington threatened to limit Raiffeisen’s access to the dollar, a potential death sentence for Russia’s biggest western lender.
Interviews show that the company is still under direct international pressure to leave Russia despite the termination of the operation to buy a stake in the Austrian construction company Strabag, owned by Russian businessman Oleg Deripaska, who was under sanctions.
The interviews also show that Raiffeisen has not heeded warnings from European regulators more than a year ago that it was playing a risky game with Washington over its business in Russia.
Washington’s threat to punish Raiffeisen has not been withdrawn, and it continues to closely monitor the bank, its relationship with Russia and any potential sanctions violations, two sources briefed on the process said.
Washington has the right to fine banks that violate sanctions or disconnect them from the dollar. In 2014, it fined French bank BNP Paribas $9 billion for violating US sanctions on Sudan, Iran, and Cuba.
What will be the consequences?
Thanks to its significant industrial assets, more than 18 million customers from Vienna to Moscow and 44,000 employees, Raiffeisen is the financial backbone of Austria and most of Eastern Europe.
With the outbreak of war in 2022, Russia has become an even more lucrative source of income for the bank. As fees for foreign payments soared, Russia accounted for about half of the group’s profits in the first three months of the year.
Still, the U.S. Treasury Department’s threat to bail out Raiffeisen continues to resonate deeply with its management, a source familiar with the bank’s thinking said, adding that such a move would be “fatal,” in part because large corporations that use it for international payments will go.
One sourceUSiar with the U.S. position, said that U.S. authorities are aware of the catastrophic consequences such a move could have for Raiffeisen and its impact on the financial system as a whole and are proceeding cautiously.
Two sourUSUS direct knowledge of the process said that is why Washington wants European regulators to force the bank to loosen ties with Russia.
Instead of leaving Russia, Raiffeisen spent more than two years looking for loopholes and tricks to withdraw its money, said Nina Tomaselli, an Austrian lawmaker from the Green Party, which is part of the country’s ruling coalition.
It will be recalled that in May, the US Treasury Department warned the Austrian Raiffeisen Bank International in writing that access to the US financial system may be limited. The agreement related to Oleg Deripaska was canceled by Raiffeisen a few days after receiving the letter.
Raiffeisen is the most prominent Western bank that continues to operate in Russia. Raiffeisen also operates in Ukraine, where it owns the third largest Raiffeisen Bank (formerly Raiffeisen Bank Aval) in terms of population deposits and the number of branches.
