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Austria's Raiffeisen faces US wrath over Russian business

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LONDON/FRANKFURT, May 15 (Reuters) -The U.S. Treasury has warned Austria's Raiffeisen Bank International (RBI) that its access to the U.S. financial system could be restricted because of its Russian dealings, according to a person who has seen a letter detailing the threat.

The May 6 letteris the strongest warning yet to the biggest Western bank in Russia and follows months of pressure from Washington, and Europe, as they try to toughen up sanctions against Russia and further squeeze it financially.

RBI RBIV.VI this month abandoned a $1.5 billion deal linked with a sanctioned Russian tycoon that the U.S. opposed. But the bank's ties to Russia run much deeper. Restrictions on its access to the dollar system would have potentially deeply damaging consequences.


After Russia launched its full-scale invasion of Ukraine in February 2022, the U.S. responded with wide-ranging sanctions on Russia and its companies. Many Western companies, including banks, made a rush to exit.

But several Western banks with a big presence in Russia including RBI and Italy's UniCredit CRDI.MI have remained. Both have been in Russia since the collapse of the Soviet Union more than three decades ago.

RBI's reluctance to pull back has increasingly frustrated U.S. officials aware that their sanctions have not been as effective as hoped. Sanctions enforcement agency OFAC launched an inquiry into RBI at the start of 2023.

The bank has been delaying plans to leave Russia.

To unlock funds frozen in Russia, RBI had planned to buy a stake in construction group Strabag from a company the Vienna-based group identified as being controlled by Russian tycoon Oleg Deripaska.

The move was opposed by the U.S. Treasury because Deripaska is sanctioned.

After repeated U.S. warnings not to proceed, this month the bank dropped the bid.

The European Central Bank is also stepping up pressure on RBI, and is expected to tell it to reduce business in Russia.

Remaining in Russia has proven very profitable for banks, a disincentive to exit.


An RBI spokesperson said on Wednesday the bank had significantly reduced activities in Russia and was working towards "de-consolidation" of its subsidiary there.

Banks including RBI also say that exiting Russia is a complicated process, and that they cannot just sell up.

For an international bank to spin off local operations, it would require the approval of Russia's central bank, finance ministry and even Russian President Vladimir Putin.

Russian authorities last year made it clear to RBI, which has around 4 million local account holders and 10,000 staff, that they wish it to stay because it enables international payments, one source previously told Reuters.

U.S. sanctions denied Russian banks access to the SWIFT global payment system. That has made lenders like RBI a payment lifeline to hundreds of Russian companies.

RBI has also received support from Austria, where officials have pushed back against pressure on the bank.

Austria and Russia maintain close ties going back decades and Vienna has long acted as a hub for cash from Russia and its former Soviet neighbours.


In short, a lot.

The dollar is the cornerstone of international finance and the United States is the world's most powerful regulator chiefly because it can end a bank's access to the currency.

In its letter to RBI, Deputy Treasury Secretary Wally Adeyemo made reference to President Joe Biden's executive order authorising U.S. secondary sanctions on foreign financial institutions that conduct significant transactions involving Russia's military-industrial base.

Losing access to the dollar would be likely to plunge any bank into a crisis.

Richard Portes, a professor of economics at the London Business School who has studied sanctions, said curbing RBI's access would be "hugely damaging".

Critics of sanctions say that the U.S. is accelerating the use of alternatives to the dollar, such as the Chinese buying Russian oil with payments in yuan.

Yet the dollar remains the pre-eminent currency for international trade and is the dominant reserve currency - a status likely to endure, analysts say.


Washington has so far held back from using the new executive order to sanction foreign financial institutions.

Secondary sanctions target foreign people or companies doing business with those already under U.S. sanctions.

Washington's threat to hit foreign financial institutions with sanctions has made a significant difference in financial flows between Russia and countries such as Turkey, the United Arab Emirates, and Kazakhstan, Adeyemo said in February.


Curbing a Western bank's access to the dollar system is extremely rare.

French bank BNP Paribas in 2014 was banned for a year from conducting certain dollar transactions as part of a settlement to resolve accusations it contravened U.S. sanctions against Sudan, Cuba and Iran.

In 2018, the U.S. accused Latvia's third-biggest bank, ABLV, of money laundering and breaching sanctions on North Korea. This effectively froze the banks out of dollar financial markets and triggered its closure.

Reporting by Tommy Reggiori Wilkes and John O'Donnell; Editing by Mark Potter


دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔

ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔

کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔

خطرے کی انتباہ: آپکا سرمایہ خطرے پر ہے۔ ہو سکتا ہے کہ لیورج پروڈکٹ سب کیلیے موزوں نہ ہوں۔ براہ کرم ہمارے مکمل رسک ڈسکلوژر کو پڑھیے۔