By Nina Kienle and Mauro Orru


Raiffeisen Bank International pulled out of a deal to buy a stake in Austrian construction company Strabag from a sanctioned Russian industrial tycoon, saying it didn't feel comfortable with the transaction after recent exchanges with authorities.

The Austrian bank said Wednesday that it had made the decision out of an abundance of caution despite reassuring the market in March that a deal to buy a 27.78% stake in Strabag from a holding company controlled by Oleg Deripaska complied with Western sanctions.

After Russia's invasion of Ukraine in February 2022, the U.K. sanctioned Deripaska, imposing an asset freeze, a prohibition on transactions with U.K. individuals and businesses and a travel ban. The European Union imposed similar sanctions. The U.S. Justice Department charged the oligarch and three of his associates with sanctions evasion and other crimes.

Raiffeisen said in March that it had briefed all relevant authorities, including the U.S. Treasury and the Office of Foreign Assets Control, on the details of the transaction.

The bank had hoped to buy the stake in Strabag for 1.51 billion euros ($1.62 billion) in cash from Russia-based Rasperia Trading through its Russian subsidiary, AO Raiffeisenbank, as a first step, and then transfer it to the wider group by issuing a dividend in kind.

Strabag didn't respond to a request for comment.

Raiffeisen didn't specify what hurdles, if any, it would encounter if it decided to go ahead with the deal. Unlike countless Western businesses, Raiffeisen maintained operations in Russia after the war broke out in February 2022.

The bank entered the Russian market in 1996 and didn't shrink its business after Russia's annexation of Crimea in 2014. It has long been one of the European banks with the largest exposure to Russia.

The bank counted 9,942 employees in Russia at the end of 2023, according to its annual report, 405 more than in 2022. 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 bank said it would continue to work toward the deconsolidation of its Russian subsidiary despite dropping the Strabag deal.


Write to Nina Kienle at nina.kienle@wsj.com and Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

05-08-24 0927ET