In a bold move, Austria’s Raiffeisen Bank International (RBI) finds itself in the eye of a geopolitical storm, entwining profits with politics in a manner that has drawn sharp criticism, especially from the U.S. Austria, with its storied and complex relationship with Russia, has seen its financial institutions, particularly RBI, under the microscope for their Russian connections. In a controversial deal involving Russian billionaire Oleg Deripaska, RBI tries to funnel profits from Russia amidst a thicket of sanctions.
RBI, the largest Western bank still operating within Russia, has announced plans to acquire a significant stake in Austrian construction giant Strabag, using profits accrued in Russia, which it has been unable to repatriate due to restrictions by the Russian central bank. The deal, valued at approximately €1.5 billion, not only tests the bounds of international sanctions but also Austria’s own delicate stance towards Russia.
Critics, including US officials and Austria’s central bank head, Robert Holzmann, have voiced concerns over the transaction’s compliance with sanctions and the inherent risks involved. Holzmann’s cautious stance underscores the fine line RBI is treading, attempting to navigate the sanctions minefield without detonating legal or financial repercussions.
RBI is planning a complex transaction to retrieve frozen profits from the country: it wants to buy 28.5 million shares in the Austrian construction group Strabag via its highly profitable Russian subsidiary. This stake currently corresponds to around 24%, for which RBI would pay around €1.1 billion. This block of shares is currently held by the Russian MKAO Rasperia Trading, which Oleg Deripaska controls.
However, Deripaska is subject to sanctions by the U.S. and the EU and, therefore, no longer receives dividends for his Strabag shares. Recently, MKAO Rasperia Trading was sold to a Russian investor named Iliadis, who is not sanctioned, according to RBI. However, it is not known who is behind Iliadis.
The deal’s complexity raises eyebrows. The layers seem designed to obscure rather than clarify the ultimate beneficiaries, with suspicions looming that Deripaska, a figure sanctioned by the US and EU, might indirectly profit.
The US Treasury’s explicit warnings to RBI highlight the international community’s vigilance against any maneuvers perceived as circumventing sanctions. The specter of punitive measures from the US, potentially severing RBI from the American financial system, illustrates the high stakes involved. Such a scenario would not merely be a setback but could threaten the very existence of the bank.
This episode unfolds against the backdrop of Austria’s recent embarrassments on the international stage, with allegations of espionage and money laundering for Russia via the now-defunct Wirecard, led by Austrians Markus Braun and the fugitive Jan Marsalek. These incidents have cast a long shadow over Austria’s financial and intelligence sectors, complicating its relationship with both the East and West.
RBI‘s maneuver through this legal and ethical labyrinth highlights the broader challenges faced by European banks in Russia. As sanctions tighten and the war in Ukraine persists, banks like RBI must weigh the financial allure against the reputational and operational risks of their Russian engagements. This balancing act, fraught with legal ambiguities and geopolitical pressures, underscores the intricate dance between business interests and national security concerns in today’s globalized world.
As RBI forges ahead with its Strabag stake acquisition, the international community watches closely, ready to scrutinize every step. The outcome of this deal could set precedents for how Western companies engage with sanctioned entities and navigate the murky waters of international finance. For RBI, the quest for profit in Russia is a gamble with high rewards but potentially catastrophic risks.
