Raiffeisen Bank makes millions from companies that supply Russian army

Austria's Raiffeisen Bank International AG is making money from companies that supply Putin's army.

Source: Bloomberg

Details: Last year, Raiffeisen's Russian unit received over RUB 62 million (approx. US$620,000) in fees for its services from the Russian chemicals company Unichim.

Unichim had been supplying sanctioned companies with components needed to manufacture military systems.

It is noted that shares in the bank fell by 6.4% in Vienna following the publication of Bloomberg’s report.

Raiffeisen Bank carried out financial transactions for Unichim using accounts held by sanctioned banks, including Sberbank, VTB Bank and Commercial Bank Solidarnost.

In addition, Unichim supplied acids to Ravenstvo, another sanctioned Russian company. The supplies were for a project to develop and upgrade platforms and ammunition for multiple-launch rocket systems and aerial bombs.

The US Treasury Department says that Ravenstvo, which develops navigation radar systems, is a division of the sanctioned Russian concern Granit-Electron, which manufactures key elements of missile systems.

It has also worked with Proletarsky Zavod, part of the United Shipbuilding Corporation, Russia's largest shipbuilder.

Bloomberg reports that Raiffeisen Bank also handled transactions for Totalelectro, a company which supplied cables to the Smolensk Aviation Plant.

It says the bank is likely to have other clients that facilitate supplies for the Russian defence industry.

The high profits generated from its operations in Russia helped Raiffeisen Bank earn more than US$1 billion in the first three quarters of 2023, accounting for about 50% of the group's total profit. Furthermore, the bank paid €277 million in taxes to Russia over the same period.

However, due to capital transfer restrictions imposed by the Russian authorities, Raiffeisen is unable to transfer these funds to its parent company in Austria, which has led to the accumulation of €4.4 billion of excess capital in Russia.

Background:

• A Russian court has ordered Austria's Raiffeisen Bank International (RBI) to pay more than €2 billion (US$2.1 billion) in damages to the Russian co-owner of Strabag, the investment company Raspberia.
• The Russian government will block any attempts by Raiffeisen Bank International AG and UniCredit SpA to sell their local units to any buyer who may be subject to sanctions.

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