Austrian Raiffeisenbank tightened conditions for payments through CIS banks

The Austrian group Raiffeisenbank International decided to reduce the risks associated with the transactional business in the CIS. Because of this, Kazakh banks have introduced sectoral restrictions on payments through correspondent accounts,

The Austrian banking group Raiffeisenbank International (RBI) decided to reduce correspondent relations with banks in the CIS countries, a representative of a credit institution told RBC.

“RBI is constantly reviewing its correspondent business and is closely monitoring changes in payment and trade flows. Therefore, we have decided to adjust our risk appetite in the CIS region as well,” said an RBI spokesman.

According to him, this led to the fact that Kazakhstan's Halyk Bank (the largest bank in the country), which has correspondent accounts with RBI, introduced "restrictions on payments related to certain industries." So did other RBI clients in Kazakhstan, the group's spokesman added.

Correspondent accounts are required for making transfers in foreign currencies. Earlier, Halyk Bank published an updated list of correspondent banks for transfers in euros. It does not contain RBI, although back in March its details were indicated for such shipments, follows from the documents on the Halyk Bank website (the MarketOverview telegram channel drew attention to this).

A representative of Halyk Bank told RBC that this correspondent account is operating normally. “On the official website of the bank halykbank.kz, the details of not all, but only the main correspondent banks are posted. The Bank independently determines the main correspondent banks from the general list, depending on the business feasibility and commercial conditions for making payments,” he explained. The RBI also stressed that both banks "continue a well-established mutual cooperation."

How RBI is reducing its presence in Russia

On Friday, April 5, RBI announced the closure of correspondent accounts for all Russian banks, except for its "daughter" - the Russian Raiffeisenbank. RBI is working on two scenarios for curtailing business in Russia: either selling or withdrawing the asset from the group. The group is also reducing business activity in Russia, which means minimizing its cross-border presence, reducing lending and the overall volume of foreign currency transactions.

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RBI is currently under pressure from regulators and its own shareholders due to its presence in Russia. As Reuters wrote , at the end of March, the European Central Bank (ECB) demanded that Raiffeisen leave the Russian market, or at least submit an action plan in this direction. In February, the US Treasury also launched an RBI probe into its Russia-related business.

“We are fully cooperating with OFAC and have agreed on the scope and timing of the requested information. We agreed to provide the requested information in three stages. Now we are completing the second delivery package, and the third will be completed in June, ”said Johann Strobl, head of Raiffeisenbank International, on Friday, May 5. He stressed that the bank is confident in the reliability of its compliance systems.

Kazakhstan has also recently been under the close attention of Western countries. The United States in April announced the growing risk of imposing sanctions against Kazakh companies and banks, which help Russia evade the imposed restrictions. The EU is already preparing sanctions against Kazakh companies for helping Russia bypass trade restrictions, Reuters learned. Last year, the Kazakh authorities announced that they would not help Russia circumvent sanctions, and this spring, the FT wrote about the launch in the country on April 1 of a mechanism that would limit parallel imports to Russia.

Why these measures will also affect banks in the CIS

RBI’s decision to reduce its correspondent business in some CIS countries is directly related to pressure on the bank from the ECB, the European Commission and the US authorities, George Voloshin, an expert on sanctions of the Association of Certified Money Laundering Specialists (ACAMS), believes: “Now the bank is under serious pressure not only in order to exit the Russian market as soon as possible, but also in order to reduce its participation in trade flows within the Eurasian Economic Union, within which Kazakhstan is by far the most important participant after Russia.” Among the industries that have fallen under the restrictions, there may be imports of so-called luxury goods, as well as any dual-use and military goods, Voloshin argues.

Because of the sanctions, Russians are actively using banks from friendly countries, including the CIS countries, and the RBI group “cannot be completely sure that proper sanctions compliance is carried out in such banks, which increases its sanctions risks,” adds Anton Imennov, Senior Partner at Pen&Paper . In the absence of official information, “it is difficult to talk about pressure on RBI from the US and the EU, especially given the recent statement by the Austrian regulator that there is no threat to the bank due to doing business in Russia,” but this scenario cannot be ruled out, the lawyer emphasizes.

According to Imennov, the restrictions may affect "areas related to the conduct of export operations in relation to certain groups of goods, including military goods and technologies necessary for the extraction of minerals and natural resources, oil refining, and aerospace."

Voloshin recalls that in the case of the Central Asian countries, small local banks often gained access to the international financial system through Russian partners who acted as correspondents for them and, in turn, had their own correspondents in the West. “Since the recent restrictions concern primarily Russia, the likelihood that CIS banks outside of Russia will gain access to correspondent accounts with RBI through non-Russian banks is low,” the expert notes.

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