Raiffeisen Bank International (RBI) plans to swap 400 million euros of profits locked up in Russia for cash locked up in Europe by Russia’s biggest banking group, Sberbank, a plan that underlines the Austrian lender’s efforts to reduce its exposure to the Russian market. This is stated in an article published on Wednesday in the British edition of the Financial Times (FT).

The swap deal, unveiled last week at a Raiffeisen board meeting, involves Sberbank receiving rubles from Raiffeisen’s Russian subsidiary that cannot be taken out of the country due to capital restrictions imposed by the Kremlin, sources who wanted to stay told the FT. anonymous.

Project “Red Bird”

As part of the so-called “Red Bird” project, Raiffeisen will receive cash from Sberbank’s European subsidiary.

“Think of this operation as the financial equivalent of a Cold War prisoner swap,” said one source involved in the operation.

This creative solution is likely to arouse suspicion from Western authorities and politicians, as it would mean allowing the Russian state-owned bank to repatriate some of its cash that is stuck in Europe. Any transaction must be approved by regulatory authorities in Washington, Brussels and Moscow.

A source close to Sberbank warned that completing the deal would be difficult due to the difficulty of obtaining regulatory approvals in Washington and Brussels.

“They transfer the cash to a sub-sanctioned structure,” the source claims.

How Raiffeisen is trying to withdraw money from Russia

The exchange is a “theoretical consideration,” a Raiffeisen spokesman said. The Austrian bank is “analyzing several options” for how it can reduce its exposure to the Russian market, stressing that any measure will be tailored to the requirements of the sanctions.

Raiffeisen epitomizes the dilemma many foreign groups have faced with their operations in Russia since the invasion of Ukraine. The Vienna-based institution is the largest Western lender in Russia by assets, posting record profits there in 2022.

According to the plan, the rubles will be transferred from Raiffeisen’s Russian subsidiary to Sberbank in Moscow. Instead, the equivalent amount in euros, which is in the deposit account of the former division of Sberbank in Europe, will be transferred to Raiffeisen in Vienna.

Representatives of Sberbank did not comment on the agreement.

For several months, the European division of Sberbank has been in the process of liquidation, having sold most of the loan portfolio to European competitors.

Cash and other assets from such sales and the liquidation of other enterprises worth up to 400 million euros are blocked in a holding company in Vienna. (Agerpress)

(article photo: ©Stanislav Okulov|Dreamstime.com)