In the wake of Vladimir Putin’s invasion of Ukraine, Raiffeisen, an Austrian bank, faced uncertainty over its business in Russia. However, fast forward to today, and the lender’s unit in the country is thriving. With a staff of nearly 10,000 employees, a 7% increase since 2022, and a profit of €1.8bn in 2023, Raiffeisen has seen significant growth and success in the Russian market.
As one of the dozen banks that Russia considers “systemically” important to its economy, Raiffeisen plays a crucial role in the financial landscape of the country. It is also a key contributor to the Kremlin’s finances, having paid half a billion dollars in tax last year. Despite facing challenges and scrutiny from the international community, Raiffeisen has managed to navigate the complex Russian market and deliver impressive results.
Raiffeisen is not the only Western bank experiencing success in Russia. The five EU banks with the largest Russian operations have seen their combined profits triple to nearly €3bn in 2023. This growth has made these banks a target, with America threatening to restrict Raiffeisen’s access to its financial system due to its Russian dealings. In response to criticism, the bank plans to halt dollar transfers out of the country on June 10th.
However, the landscape for Western banks in Russia is becoming increasingly uncertain. Russia has begun seizing the assets of Western banks that it deems “unfriendly”, putting their profits and operations at risk. The paper profits that these banks have generated in Russia could soon be in jeopardy if tensions escalate further.
Despite the challenges and risks involved, Raiffeisen and other Western banks continue to operate and thrive in the Russian market. Their success and profitability demonstrate the opportunities that exist in the country, but also highlight the complexities and uncertainties that come with doing business in Russia. As the geopolitical situation evolves, these banks will need to navigate carefully and adapt to changing circumstances to maintain their presence and profitability in Russia.
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