Raiffeisen Bank decides to leave the Belarusian market.
In Russia, Raiffeisen Bank International (RBI) based in Vienna, Austria, is now only operating on a limited basis and is temporarily continuing operations through a local banking subsidiary. The bank has announced its intention to sell its Belarusian subsidiary at a significant loss of tens of millions of euros.
RBI has managed to find a buyer for its Belarusian subsidiary, with the signing of a deal to sell its 87.74% stake to "Soven 1 Holding Limited," an investor from the United Arab Emirates. Once the sale is completed, anticipated in the fourth quarter, RBI expects a negative impact of €300 million on its consolidated earnings, largely due to the difference between the selling price and the previously stated book value.
The bank also anticipates an additional negative effect of approximately €500 million due to the "reclassification of predominantly historical foreign exchange losses," currently included in other results. The bank's core capital ratio, excluding the Russia business, will be affected by approximately 5 basis points due to the transaction.
Russian restrictions
RBI has already reduced its business in Russia due to pressure from the European Central Bank. However, a Russian court has issued an interim injunction preventing RBI from selling its subsidiary bank in Russia.
Even if legal hurdles for a withdrawal from Russia can be overcome in the short term, selling the Russia business would not be straightforward for the Austrians: They would need the approval of Russian leader Vladimir Putin to exit Russia, a warring and internationally isolated country. Moreover, the bank would first need to find a buyer for its Russian subsidiary bank who is not subject to sanctions and is willing to enter the Russian banking market under the conditions of a war economy.
Despite the ongoing limitations in Russia, Raiffeisen Bank International (RBI) is still contemplating selling its Russian subsidiary, subject to overcoming legal hurdles and securing a suitable buyer who isn't under sanctions and is willing to operate in the Russian banking sector under the current economic circumstances. The sale of the economy in Russia could have a significant impact on RBI's overall earnings, as shown by the loss-making sale of its Belarusian subsidiary.
