Such a step is not planned immediately. However, it is an emergency plan if the Russian subsidiary bank runs out of money because local companies are demanding liquidity or capital. The bank denies it.
The RBI did not want to comment on the report in detail, but stated in a short statement to the APA: “Raiffeisen Bank International has no plans to leave Russia”.
RBI is one of the largest lenders in Eastern Europe and would be the first European bank to leave Russia with such a step. RBI would protect itself from further damage. She has worked in Russia for 30 years, since the collapse of the Soviet Union.
“In situations like this, you usually drop the deal,” said one of the people familiar with the situation. In such a case, two scenarios would be conceivable: On the one hand, the transfer of the business in Russia to a new owner or, on the other hand, the temporary cessation of activities in the country, the person said. But such a move would have to be done in coordination with Russia’s central bank, which may impose its own conditions, the insider added.
A spokeswoman for the bank declined to comment when asked by Reuters. The day before, when the RBI share on the Vienna Stock Exchange was falling again, the bank tried to calm down: In the Ukraine, the most important banking transactions can currently be maintained. The Russian subsidiary is well capitalized and there are currently even inflows. RBI’s Russian subsidiary told Reuters that the bank intends to continue providing uninterrupted financial services to customers based on existing legislation.
Damage still unclear for the time being
The full damage to RBI was unclear for the time being. A loss of business in Ukraine and Russia would be painful for the Austrians, but manageable, the insiders said. “The big challenge is that the bank will lose the ‘cash cows’,” said one person. After all, RBI generated most of its profits in these two markets. The business in Russia recently accounted for almost a third of the group’s net profit. According to the business report, RBI made a profit of around EUR 600 million for 2021 in the entire “Eastern Europe” region, which includes Russia, Belarus and Ukraine. This corresponds to almost half of the consolidated profit of EUR 1.37 billion achieved in the previous year.
2.4 billion invested
A company presentation also shows that RBI has invested EUR 2.4 billion in the Russian subsidiary, which had assets of EUR 11.96 billion at the end of last year. Assuming that those monies have to be written off, it would cost the group just over 100 basis points from the group’s Common Equity Tier 1 ratio of 13.14 percent, according to Reuters calculations.
The Ministry of Finance in Vienna also tried to appease. “RBI is a very well positioned bank with excellent management that is well prepared for all eventualities,” the ministry said when asked by Reuters. RBI and other Austrian banks have been doing business in this region for decades and can handle the risk well. RBI is majority owned by the cooperatively organized Raffeisenlandesbanken.
Source: Nachrichten
