© Reuters. FILE PHOTO: Cars drive past a branch of the Raiffeisen Bank in Moscow, Russia, February 11, 2023. REUTERS/Tatyana Makeyeva
(Corrects spelling of ‘an’ in first paragraph)
By John O’Donnell, Francesco Canepa, and Alexandra Schwarz-Goerlich
FRANKFURT/VIENNA (Reuters) – The United States sanctions authority has launched an investigation into Raiffeisen Bank International over its Russia-related dealings, increasing scrutiny of the Austrian lender that plays a key role in the Russian economy.
In response to questions from Reuters, the bank said it had received a request from the US Treasury Department’s Office of Foreign Assets Control (OFAC) in January to “clarify the payments business and related processes maintained by RBI in light of recent events involving Russia and Ukraine.”
OFAC had asked Raiffeisen for details of his exposure in Russia, the partially occupied Donbas, Ukraine and Syria, including about the transactions and activities of certain clients, a source told Reuters.
The US agency had requested a response by February, the person said, adding that Raiffeisen’s lawyers have negotiated an extension and have agreed to answer questions in three tranches of information to be sent in early April, May and June.
A spokesman for the US Treasury Department declined to comment.
Raiffeisen told Reuters in a statement that he was cooperating fully with OFAC and that he understood the request was not prompted by a specific transaction or business. He said that he had processes in place to ensure compliance with the sanctions.
A spokesman said he was “confident that the information provided to OFAC will satisfy their request,” adding that the questions posed were “of a general nature.”
Raiffeisen has not been sanctioned in the past, but the January information request worries European financial regulators responsible for overseeing the bank because it could ultimately lead to sanctions against Raiffeisen, two people with direct knowledge of the case said. affair.
Raiffeisen is deeply embedded in the Russian financial system and is one of only two foreign banks on the Russian central bank’s list of 13 “systemically important lending institutions,” underscoring its importance to Russia’s struggling economy. with sweeping Western sanctions.
As Austria’s second-largest lender, it also underpins much of that nation’s economy, as well as having extensive operations in Eastern Europe. An Austrian official said Austrian authorities were closely monitoring the situation at Raiffeisen and its business in Russia because of the bank’s importance.
Nearly a year since Moscow launched what it calls a “special military operation” in Ukraine, Raiffeisen is among a handful of European banks remaining in Russia.
But he has faced criticism, including from investors for his decision to continue doing business with Moscow. The bank previously defended its position, saying its exposure to Russia is contained.
Raiffeisen made a net profit of about 3.8 billion euros last year, thanks in large part to a profit of more than 2 billion euros from its business in Russia. Meanwhile, Russian savers have deposited more than 20 billion euros in the bank.
US INFLUENCE
The United States Treasury imposes sanctions and may penalize those who violate them. Its most aggressive sanctions tool freezes US assets and excludes banks from accessing US dollars, which is essential for international trade and finance.
The toughest sanctioning tool in OFAC’s arsenal, known as the SDN list, freezes assets in the United States and prohibits companies or US citizens from trading with those listed, freezing a bank or individual from all dollar payments. .
This gives the United States leverage far beyond its shores to enforce its sanctions. Alternatively, OFAC can also resort to less stringent measures, such as issuing fines and issuing warning letters about sanctions violations.
However, two former US officials, who asked not to be named, said Washington is generally reluctant to take such draconian steps.
Viktor Winkler, a German sanctions attorney, declined to comment specifically on Raiffeisen, but said it was common for OFAC to request information from banks and did not automatically lead to sanctions.
OFAC has sanctioned five major Russian banks, including the state-backed Sberbank as part of a response to that country’s invasion of Ukraine, as well as wealthy oligarchs.
Shortly after the Russian invasion of Ukraine, the United States blocked Sberbank from processing payments through the American financial system. Its European arm, based in Vienna, closed soon after.
Sberbank previously said that the new sanctions would not have a significant impact on its operations.
In 2018, the US Treasury sanctioned Latvia’s ABLV Bank due to concerns about illicit activities largely related to Russia, causing the bank to quickly fall apart.
Johann Strobl, Raiffeisen’s chief executive, told shareholders in March that he was examining options for the Russian business, but reaching a conclusion would take some time because the bank is not “a sausage stand” that could be closed overnight. the morning.
