Category
Latest news

Raiffaisen Still Facilitating Transactions in Russia’s Defense Sector Despite Promised Exit

2 min read
Authors
Raiffaisen Still Facilitating Transactions in Russia’s Defense Sector Despite Promised Exit
Austrian banking group Raiffeisen, one of the last major Western banks in Russia, said on March 30, 2023 it was considering a "sale or spin-off" of its subsidiary. (Source: Getty Images)

Raiffeisen Bank International’s Russian division has conducted transactions for companies supplying materials to Russia’s military industry, Bloomberg reported on February 3.

Raiffeisen is the largest Western bank still operating in Russia. While it announced plans in July 2024 to significantly scale down its operations in the country, it has not fully withdrawn.

Over the past year, Raiffeisen’s Russian branch received more than $620,000 for services provided to Unichim, a chemical company that is not under sanctions but supplies components to sanctioned firms producing military equipment, according to the report.

The bank facilitated these transactions through accounts at sanctioned Russian banks, including Sberbank, VTB, and Soledarnost.

Unichim also supplied acids to Ravenstvo, a Russian company involved in the development and modernization of multiple-launch rocket systems and aerial bombs.

Ravenstvo, which specializes in radar technology, is a division of Granit-Electron, a sanctioned Russian defense manufacturer supplying key missile system components. It has also worked with Proletarsky Shipyard, part of Russia’s largest shipbuilder, the United Shipbuilding Corporation.

Raiffeisen additionally processed transactions for TotalElectro, a cable supplier to the Smolensk Aviation Plant, the report suggesting the bank may have other clients connected to Russia’s defense sector.

In September, a Russian court imposed restrictions on the transfer of Raiffeisen shares, complicating its planned exit from the country. The bank stated that this ruling would “inevitably lead to further delays” in its withdrawal.

Due to Russian government restrictions, Raiffeisen cannot transfer its Russian earnings to its Austrian parent company, leading to an accumulation of 4.4 billion euros ($4.5 billion) in excess capital within Russia.

In 2023, Raiffeisen’s Russian branch generated over $1 billion in profit during the first three quarters, accounting for roughly half of the group’s total earnings. It also paid 277 million euros ($284 million) in taxes to Russia over the same period according to Bloomberg.

In related news, Vladimir Putin approved  the sale of Goldman Sachs’ Russian subsidiary to Armenian investment fund Balchug Capital on January 31. The US bank signed a binding agreement for the sale, a source told Reuters.

See all

Since Russia’s invasion of Ukraine, Moscow has required Putin’s approval for foreign asset sales.