Exclusive: Washington urges Raiffeisen Bank in Austria to terminate deal with Russian tycoon, sources reveal – Reuters

Exclusive: Washington urges Raiffeisen Bank in Austria to terminate deal with Russian tycoon, sources reveal – Reuters

© Reuters. FILE PHOTO: A sign advertising Raiffeisen Bank is seen behind figures of participants in the 1917 Bolshevik Revolution, which form a fragment of a monument dedicated to Soviet state founder Vladimir Lenin, in Moscow, Russia, on February 11, 2023. REUTERS/Tatyana Mak

By John O’Donnell and Alexandra Schwarz-Goerlich

VIENNA (Reuters) – The United States is pressuring Austria’s Raiffeisen Bank International, Russia’s largest Western bank, to abandon plans to buy a Russian tycoon’s industrial stake for 1,000 euros. 5 billion euros ($1.6 billion), with several people having direct knowledge of the negotiations. said.

Washington’s intervention risks derailing one of the biggest Western deals in Russia since the start of the war in Ukraine and increasing pressure on the Austrian group which manages billions of euros in international payments on behalf Russians, two sources said.

Raiffeisen is buying the stake in Vienna-based Strabag from a company the construction group identified as being controlled by Oleg Deripaska.

The bank presented the deal, which is going through Russia, as a way to unlock some of the billions of euros stuck in Russia and potentially loosen its ties. The December news caused a surge in shares of the bank, which has been hit hard because of its ties to Russia.

In recent weeks, senior U.S. Treasury officials have raised concerns about the transaction in meetings with the bank and Austrian authorities, the sources said. They stressed that Deripaska is sanctioned.

U.S. government officials, who believe Deripaska will benefit from the sale, have asked the bank to provide details about the individuals and companies involved in the deal, these sources said.

If Raiffeisen goes ahead anyway and the deal proves to violate U.S. sanctions, Washington could impose sanctions on the bank, two of the sources said.

In light of the US position, one person said Austrian authorities would refrain from giving the green light, while another said the bank itself was preparing to abandon the deal.

A spokesperson for the bank said it had “diligently checked the compliance of the Strabag transaction with all applicable sanctions, before signing it” and that it had, in recent weeks, “informed all relevant authorities , including the US Treasury and OFAC (Office of Foreign Assets Control).

“It goes without saying that RBI will not enter into any agreement that would violate sanctions or expose RBI to the risk of sanctions,” the spokesperson said.

A spokeswoman for Deripaska pointed to earlier remarks, in which she said he had no control over the company owning Strabag’s stake, calling Western sanctions misguided and based on false accusations.

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Two years after the start of the war, Raiffeisen’s continued presence underlines the depth of relations between Austria and Russia, linked to Russian gas pipelines, and the fact that Vienna serves as a hub for liquidity from Russia and the former Soviet states.

The bank provides a vital financial lifeline for millions of Russian customers who want to send euros or dollars abroad.

The discussions are taking place amid continued scrutiny by regulators of Raiffeisen and its relations with Russia, which began more than a year ago when OFAC, the agency responsible for enforcing American sanctions, began looking into the bank’s activities in Russia.

The U.S. Justice Department’s Banking Integrity Unit, part of the Criminal Division, also investigated Raiffeisen because of his activities in Russia, said a person familiar with the matter, who described the investigation as being in progress.

Another person said a senior Justice Department official was in regular contact with the Austrian bank regarding Russia and had often visited Vienna on the matter. The Justice Department declined to comment.

Raiffeisen shares fell after the Reuters report was published, at one point trading down about 16%.

Raiffeisen also canceled the sale of a 650 million euro bond, according to one of the banks organizing this process, which circulated a note consulted by Reuters accusing “an unfavorable reaction of the market to the latest titles”.

So far, top Austrian officials, angered by what they see as U.S. bullying of a small, neutral country, have defended the bank because it is part of an influential industry group that supports the economy.

But two people close to the government’s thinking said officials were not committed to defending its latest deal on a stake in Strabag, which built the Sochi Winter Games Olympic stadium and luxury apartments in Moscow .

A spokesperson for the European Commission, which oversees EU sanctions against oligarchs including Deripaska, said it was aware of the transaction and “requested clarification from the Austrian authorities, whose responses are pending.”

The Commission is “in close contact with the US authorities”, the spokesperson said, adding: “In general, under EU sanctions, the assets of natural and legal persons subject to the asset freeze must be frozen, i.e. it is essentially prohibited to manipulate these assets.” “.

Recently, Austria pressured Ukraine to remove the RBI from its Ukraine blacklist, waiting to support new EU sanctions against Russia until it does so, said told Reuters by people familiar with the matter.

Austria and the RBI wanted it removed from kyiv’s list of “international war sponsors”, which aims to shame companies doing business in Russia.

Although Italy’s UniCredit also has operations in Russia and is also reluctant to withdraw, RBI is much larger and has become a test of Western resolve to end ties with Russia.

Russian authorities have made it clear to RBI, which has about 2,600 corporate clients, 4 million local account holders and 10,000 employees, that they want the company to stay because it allows international payments.

RBI had announced plans to split its operations in Russia, but two years into the war, little has changed.

($1 = 0.9226 euros)

(Additional reporting by Karen Freifeld in New York, Polina Devitt in London and Yoruk Bahceli in Amsterdam; editing by Elisa Martinuzzi and Tomasz Janowski)

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