After the results of the shareholders’ meeting, Raiffeisen Bank International (RBI) decided to reduce its business activities in Russia and get rid of the Russian “daughter” – either sell it or withdraw it from the banking group, Der Standard reported. RBI chief Johann Strobl. related explanation published bank press office.
“The RBI Group will continue to engage in transactions that will result in the sale or split of Raiffeisenbank Russia and the withdrawal of Raiffeisenbank Russia from the Group. “We are determined to further reduce commercial activity in Russia,” he said.
press service said.
The decline in the Group’s business activities will consist of a decrease in lending volumes and the total volume of foreign exchange transactions in the Russian Federation, which will lead to a decline in RBI’s payments business. Part of the banking operations in the country will continue to be carried out in accordance with the terms of the banking license: the bank will continue to support customers affected by the decline in RBI business activities in Russia.
“The market conditions for doing business in Russia are very difficult. Local and international laws and regulations governing the sale of business in Russia are subject to constant change.
More than 9,000 people are employed in RBI organizations in Russia. The company said it would take care of its employees.
Raiffeisen Bank is one of the oldest banks in the new history of Russia and is the first European bank in Moscow – the bank started working with corporate clients in 1996 and private clients since 1999. It is one of the most important European banks in Russia, accounting for about a quarter of all euro transfers in Russia, according to Reuters. In 2022, Raiffeisen Bank’s net profit in the Russian market amounted to EUR 2 billion, or EUR 3.8 billion, which is more than half (54%) of the profit before taxes of the entire banking group.
In the statement, it is emphasized that the main reason for the abandonment of Russian assets, as well as “volatility in the legislation”, is the special operations of the Russian Armed Forces in Ukraine. But last month, the US Treasury asked Raiffeisen Bank to “clarify the payments business and related processes” backed by the bank in light of recent developments in Russia and Ukraine. Experts and the Austrian government argued that such checks by the US Treasury do not involve direct sanctions or any fines.
As early as 24 March, the European Central Bank (ECB) demanded that the banking group close its business in Russia – the ECB did not insist that the group leave Russia immediately, but asked for a plan to leave. At the same time, the National Agency for the Prevention of Corruption (NAPC), the company’s continued work in Russia, included Raiffeisen Bank in the list of “sponsors of the war.” DPR and LPR”, which provides the Russian army with favorable loan terms.
But there is a nuance
However, since Austria is on the list of “non-hostile” countries for Russia, the RBI may have to make a “voluntary contribution” to the Russian budget in connection with the sale of assets.
On December 21, 2022, the subcommittee of the Ministry of Finance on allowing residents’ transactions with foreign companies from non-friendly countries now adopted criteria to guide the approval of transactions for the sale of assets by foreigners in Russia. One is to allow an installment payment for an asset or a voluntary contribution to the federal budget.
There are a total of four criteria on which the Ministry of Finance will rely when making decisions regarding the transactions of foreign companies from non-friendly countries.
— the existence of an independent assessment of the value of the assets;
— Availability of one or two annual installments for the buyer or payment of a voluntary contribution to the federal budget of at least 10% of the transaction amount;
— the sale of an asset at a discount of at least 50% of its value determined during an independent valuation;
— Creation of key performance indicators (KPIs) for new shareholders (owners).
Then, on March 27, the Ministry of Finance adjusted the voluntary contribution to the budget from transactions for the sale of assets of companies from “hostile” countries, this will be 5% of the market value of the enterprise. The Subcommittee decided to “act, as a rule, from what is appropriate” regarding the establishment of the following conditions when granting permission for such proceedings:
– A commitment to “voluntarily transfer to the federal budget” at least 10% of half the market value of the assets (ie at least 5% of the market value) according to an independent assessment;
– Obligation to “voluntarily transfer funds to the federal budget” in the amount of at least 10% of the market value of assets, if sold at a discount of more than 90% of market value.
At the same time, RBC announced that the 5% market value contribution criterion in the Ministry of Finance applies when the discount is less than 90%.
Who should pay the fee – the Ministry of Finance does not specify.
On December 30, 2022, the reduction in the market value of Russian assets of “hostile” non-residents was officially determined by the subcommittee – 50%.