Raiffeisen Bank International (RBI) is taking steps to spin-off its money-making Russian arm to shareholders, according to three people familiar with the matter. The move comes amid mounting pressure to cut ties with Moscow due to its involvement in the Ukraine conflict.
The spin-off plan faces several hurdles, including approval from the European Central Bank (ECB) and the blessing of Washington, which is investigating RBI’s Russia links. If the spin-off is successful, it could make RBI’s owners, led by Austrian community banks, shareholders in a new Vienna-listed entity.
The plan is designed to distance RBI from Russia, but it would not be a clean cut. RBI said that while it had reduced some Russian activities, it had an obligation to preserve operations there to support customers and its 9,000 staff.
Raiffeisen is under pressure after it emerged that it was one of the banks obliged to take part in a Russian scheme to grant loan payment holidays to troops fighting in Ukraine. In January, the U.S. sanctions authority launched an inquiry into Raiffeisen over its Russia business and the ECB is also pressing Raiffeisen to unwind it.
Austria’s Foreign Minister Alexander Schallenberg has defended the bank, saying that Raiffeisen should not be singled out because it was no different to most Western companies continuing to work in Russia.
The spin-off is designed to maintain Vienna’s banking ties with Russia, while insulating Raiffeisen from the reputational fallout of war in Ukraine. However, it remains to be seen whether the entity will be truly independent of RBI and whether it will be supervised by Austria or the ECB.