Austria's Raiffeisen sees sale of 60% of Russia business as likeliest option
By Alexandra Schwarz-Goerlich and Tom Sims
VIENNA (Reuters) - Austria's Raiffeisen Bank International, the biggest Western bank in Russia, believes a sale of 60% of its business there is the most likely scenario as it seeks to withdraw from the market, its CEO said on Tuesday.
RBI has been under pressure from authorities on both sides of the Atlantic to reduce its large footprint in Russia following the war with Ukraine, part of an effort to isolate Russia by reinforcing sanctions on banking and choking off access to Western goods.
The Vienna-based bank has been saying for more than two years that it will try to sell or spin off its giant Russian division, but faces numerous hurdles, not least the likelihood that, like other Western firms that have left, it will be forced to surrender a substantial portion of its assets.
"Currently we assume that the highest probability would be that we can sell around 60%, so we will have to keep 40%," the bank's chief executive, Johann Strobl, told analysts after publishing the bank's earnings.
He provided no further details, but said it was uncertain whether RBI would manage to extract funds it has generated from Russia. He also said any deal needed approval from Russian authorities, the European Central Bank, Austria's regulator and the U.S. Treasury.
After RBI said in April that it would be required by the ECB to further decrease its business in Russia - like its Italian peer UniCredit - Strobl said it would stop most new lending and charge high maintenance fees to discourage deposits.
It will also refuse deposits from any financial institutions other than subsidiaries of Western banks.
RBI's shares traded more than 5% higher after the bank reported a 14% year on year rise in second quarter consolidated profit to 661 million euros ($715 million), beating analysts' consensus forecast of 523 million euros.
Erste Group Research said it was sticking to its positive recommendation and that RBI's business excluding Russia was "doing well and remains substantially undervalued".
RBI generated half of its post-tax profit in Russia during the first six months of the year, but those earnings stay with the local subsidiary because of Western sanctions.
In May, after intense U.S. pressure, RBI dropped a bid for a 1.5 billion euro industrial stake linked to Russian tycoon Oleg Deripaska, part of a plan designed to unlock its funds frozen in Russia.
($1 = 0.9240 euros)
(editing by Rachel More, Kirsten Donovan, Miranda Murray, Susan Fenton and Kevin Liffey)