By Mauro Orru
Raiffeisen Bank International said it expects the European Central Bank to make a request for it to reduce its exposure to Russia in a more timely fashion, after Raiffeisen slowly curtailed operations but never left the country following its invasion of Ukraine.
The Austrian bank said Thursday that it expected the ECB to issue such a request in the near term. Unlike countless Western businesses, Raiffeisen opted to maintain operations in Russia after the war broke out in February 2022.
The bank counted 9,942 employees in Russia at the end of 2023, according to its annual report, 405 more than in 2022. Russia contributed 1.34 billion euros ($1.43 billion) to Raiffeisen's profit last year. However, the lender said it had continued to work on a spinoff or sale of its AO Raiffeisenbank subsidiary throughout 2023, adding that both options require approvals from Russian and European authorities.
The lender said draft requirements from the ECB went far beyond its own plans to further curtail Russian operations, warning these could weigh on options to sell AO Raiffeisenbank. Under the draft requirements, loans to customers would need to decrease significantly by 2026, as would international payments originating from Russia.
After the invasion of Ukraine, Raiffeisen said its loan business in Russia had been scaled back significantly. The decline, mainly driven by the depreciation of the Russian ruble, mostly affected unsecured loans, mortgage loans to households, working capital finance and fixed-term loans to non-financial corporations.
Raiffeisen entered the Russian market in 1996 and didn't shrink its business after the annexation of Crimea in 2014. It has long been one of the European banks with the largest exposure to Russia.
Write to Mauro Orru at mauro.orru@wsj.com
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(END) Dow Jones Newswires
04-18-24 0803ET
