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US threatens to sanction Raiffeisen Bank over ties to Russia

US threatens to sanction Raiffeisen Bank over ties to Russia Illustrative photo (Getty Images)
Author: Maria Kholina

The US Department of the Treasury has issued a formal warning to Austria's Raiffeisen Bank International, indicating that its access to the US financial system might be restricted due to its business ties with Russia, according to Reuters.

According to the agency's source, on May 6, Deputy Treasury Secretary Wally Adeyemo sent a letter to RBI expressing concerns over the bank's expansion in Russia, as well as a $1.5 billion deal with a sanctioned Russian magnate.

Although the deal involving Oleg Deripaska was canceled by Raiffeisen a few days after receiving the letter, the source said that the US Treasury's concerns about Raiffeisen's business in Russia persist.

This warning is the strongest to date for the largest Western bank operating in Russia and represents a months-long pressure campaign from Washington, which has been investigating the Austrian lender's activities in the country for over a year.

A Raiffeisen spokesperson stated that the company exited the deal with Strabag and has not entered into any similar agreements.

The spokesperson mentioned that RBI has "significantly reduced" its operations in Russia and has taken extensive measures to mitigate risks associated with sanctions.

"RBI will continue to work towards the de-consolidation of its Russian subsidiary," the representative told Reuters.

Warning from the US Treasury

In the letter, Adeyemo, the second-highest-ranking official in the US Treasury, stated that Raiffeisen's expansion contradicts assurances given to the Treasury by RBI that they are attempting to wind down operations in Russia.

Adeyemo warned that RBI's actions increased the risk that the Treasury might have to take measures to limit its access to the US financial system, given concerns that its behavior endangers US national security.

On May 14, the US imposed sanctions on a network that was intended to help Russian oligarch Oleg Deripaska access $1.5 billion in frozen assets through a deal with Raiffeisen Bank International.

Additionally, Raiffeisen is the largest Western bank still operating in Russia. Raiffeisen also operates in Ukraine, where it owns Raiffeisen Bank (formerly Raiffeisen Bank Aval), which ranks third in terms of household deposits and branch network.