"Yellen warns German banks to boost compliance with US sanctions on Russia"

U.S. Treasury Secretary Janet Yellen urged German bank executives on Tuesday to step up efforts to comply with sanctions against Russia and shut down efforts to circumvent them to avoid potential penalties themselves that would cut off dollar access.

Yellen said at the start of a meeting with bankers that the Treasury's new authority to hit banks with secondary sanctions if they aid Russian military-related transactions had helped to frustrate Russia's efforts to procure goods needed for its war in Ukraine, but more work was needed. [...]

RAIFFEISEN WARNING

Yellen's warning comes shortly after the U.S. Treasury successfully pressed Austria's Raiffeisen Bank, the biggest Western bank in Russia, to ditch a deal involving a Russian tycoon.

Earlier this month, Raiffeisen Bank International (RBI) dropped a bid for a 1.5 billion euro ($1.6 billion) industrial stake linked to Russian tycoon Oleg Deripaska after intense U.S. pressure.

The deal's collapse was a fresh setback for the lender, which faces criticism for its ties to Moscow more than two years since Russia's invasion of Ukraine. The pressure also underscored Washington's willingness to take European banks to task over their Russia ties. [...]

MEANINGFUL CONSTRAINTS

And a senior U.S. Treasury official acknowledged that Western banks face "meaningful constraints" in exiting Russia, but they should not be seeking to expand their Russian businesses as Raiffeisen has.

The official added that Austrian regulators should take a more aggressive posture to avoid reputational risks for a systemic institution. [...]

Spokespersons for Germany's two largest banks, Deutsche Bank and Commerzbank, both said they had significantly reduced their business in Russia and were complying with the sanctions. [...]

Earlier this month a spokesperson for Raiffeisen announced that it had walked away from the deal and had not entered into any such transactions.

The spokesperson said RBI had "significantly reduced" activities in Russia and taken broad measures to mitigate the risks from sanctions.

"RBI will continue to work towards the de-consolidation of its Russian subsidiary," the spokesperson told Reuters.