RBI warns from Treasury over access to financial system May 6th letter expresses concerns about Russian presence Concerns remain even after U.S. abandons Deripaska deal – source Raiffeisen says Russian activities have been ‘significantly reduced’ says Austrian Ministry of Finance – assumes sanctions will be complied with FRANKFURT/VIENNA, May 15 (Reuters) – Raiffeisen Bank International (RBIV.VI) receives warning from U.S. and sees communications Open in new tab According to sources, the Treasury Department told them in writing that transactions with Russia could limit access to the U.S. financial system.
On May 6, Deputy Treasury Secretary Wally Adeyemo sent a letter to the RBI regarding the RBI’s presence in Russia and the $1.5 billion it had with sanctioned Russian tycoons that the bank later scrapped, according to the person who requested it. expressed concerns about the transaction. This is anonymous as it is a private matter.
Although the deal related to Oleg Deripaska was reversed by Raiffeisen days after the letter arrived, the U.S. Treasury remains concerned about the Austrian bank’s Russian operations, the sources said.
The warning is the strongest yet against Russia’s largest Western bank and follows months of pressure from Washington, which has been investigating the RBI’s operations in Russia for more than a year.
This underscores Washington’s deep dissatisfaction with financial institutions, despite recent decisions to abandon deals that have exacerbated these tensions.
While many Western governments and businesses have significantly reduced ties with Moscow since Russia invaded Ukraine more than two years ago, Austria has maintained ties with Russia through a vital gas pipeline. and Vienna remains a hub for cash from Russia and its former Soviet neighbors.
Reuters reported in March about strong U.S. opposition to the Deripaska deal, which Raiffeisen had advocated as a way to free up some of the money stuck in Russia.
Raiffeisen shares fell 3% at the start of trading, making it the biggest decliner among European banks.
A Raiffeisen spokesperson said the company has exited the transaction and is no longer involved in any such transaction.
The spokesperson said the RBI had taken extensive steps to “significantly reduce” its activities in Russia and reduce risks from sanctions.
“The RBI remains committed to deconsolidating the Russian subsidiary,” the spokesperson told Reuters.
Adeyemo, the second-highest-ranking official at the U.S. Treasury Department, said in the letter that Raiffeisen’s expanded activities contradict assurances the RBI has given the Treasury that it is seeking to reduce its influence on Russia, the person said. said.
Adeyemo warned that the RBI’s actions increased the risk that the Treasury Department would take steps to restrict access to the US financial system, given concerns that the RBI’s actions jeopardize US national security.
“The United States is running out of patience. Enough is enough,” said Richard Portes, a professor of economics at London Business School and author of a book on sanctions. He said there was “too much” Russian money flowing through Raiffeisen and other Western banks, frustrating Americans.
“That (money) clearly blunted the effectiveness of the US sanctions,” he said, adding: “This is a huge signal.”
pile driving pressure
The United States is the world’s most powerful regulator, largely because it can cut off banks’ access to the dollar, the cornerstone of international finance. Losing access to U.S. currency could put any bank in crisis.
In his letter, Adeyemo also referred to US President Joe Biden’s executive order authorizing secondary US sanctions on foreign financial institutions that conduct significant transactions involving Russia’s military industrial bases.
The warning adds to pressure on Raiffeisen, which provides Russian individuals and companies with a vital financial bridge to the West and access to euros and dollars.
The RBI had vowed to spin off its Russian operation, which provides a payments lifeline to hundreds of companies, under pressure from international regulators. However, two years after the war began, little has changed.
A spokesperson for Austria’s finance ministry said it assumed all sanctions were complied with, citing the bank’s commitment to de-integrate its operations in Russia.
Russian authorities have given the RBI, which has about 2,600 corporate customers, 4 million local account holders and 10,000 staff, access to international payments, one of the sources told Reuters. Therefore, he has made it clear that he hopes for its continued existence.
Italy’s UniCredit, which has operations in Russia, is similarly reluctant to leave, but RBI is much larger and has become a test of Western resolve to end ties with Russia.
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Reporting by John O’Donnell and Alexandra Schwarz-Goerlich Additional reporting by Tommy Reggiori Wilkes Editing by Elisa Martinuzzi, Louise Heavens, Tomasz Janowski
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