Raiffeisen in talks over sale of Russian banking arm, 30 March 2023

Austria’s Raiffeisen is in talks with two potential suitors for the sale of its Russian banking arm — the largest western-controlled lender left operating within the Kremlin’s territory.

Raiffeisen has come under increasing pressure from regulators and western governments in recent months over the status of its business in the country, which has boomed since Moscow launched its invasion of Ukraine in February last year.

The bank’s Russian arm manages assets of just under €27bn, with a book value of €4.1bn. In 2022 it generated profits of €2.2bn — 60 per cent of the earnings for the entire Raiffeisen group. However, Russian laws enacted since the country attacked its neighbour prevent the division from paying any dividends to its Vienna-based parent.

Speaking at Raiffeisen’s annual meeting...chief executive Johann Strobl said the bank was “progressing potential transactions” and that its management “recognise the urgency for action which the war has created”.

A senior Raiffeisen executive told the Financial Times the bank had narrowed discussions to two “viable” bidders and would work intensively in the coming weeks to assess whether a deal could be put together. The bank is hopeful it can agree terms to an exit this year.

While Raiffeisen is keen to maximise value from any transaction for shareholders, the big stumbling block is likely to be political, given recently introduced legislation that means Vladimir Putin would need to personally approve any sale.

A “plan B” being explored by Raiffeisen is a spinout of its Russian business into a separate, European-listed entity. Such a measure is seen as the more costly of the two options but also more politically viable, and will become the bank’s preferred course of action if both bids in Russia fall through...