European Banks' Exit from Russia: A Double-Edged Sword

European banks exiting Russia could harm both Western and Russian firms, warns Kremlin's Dmitry Peskov. Sanctions on major Russian banks have made foreign banks like Austria's Raiffeisen and Italy's UniCredit essential. Around 1,000 companies have exited Russia since the 2022 invasion of Ukraine, but some multinational businesses remain.

Reuters | Updated: 25-06-2024 16:54 IST | Created: 25-06-2024 16:54 IST
European Banks' Exit from Russia: A Double-Edged Sword
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European banks leaving Russia would damage both Western and Russian companies, Kremlin spokesman Dmitry Peskov said on Tuesday, pointing to the many Western businesses that still operate and use banking services in Russia.

With most major Russian banks under Western sanctions over Russia's February 2022 full-scale invasion of Ukraine, foreign banks including Austria's Raiffeisen Bank International and Italy's UniCredit, have become key financial bridges with the West, boosting profits in the process. "They perform quite important functions in transferring funds, not only in the interests of our customers of these banks, but also foreign customers," Peskov told reporters.

European Central Bank Banking Supervision has asked all banks with significant exposure to Russia to speed up their de-risking efforts by setting a clear roadmap for downsizing and exiting the Russian market. Raiffeisen has faced particular scrutiny over its hefty Russia profits and ties to Moscow. The bank was

warned by the U.S. Treasury in writing that its access to the U.S. financial system could be curbed, according to a person who has seen the correspondence.

"Don't forget that very many Western businesses work in the Russian economy, they continue to work here," Peskov said. "They have huge, multi-billion investments and the majority of companies have not left, but continue to work in this market. "So they use these banking services. If they stop, well, these companies will be just as damaged as our companies."

About 1,000 companies have left the Russian market, a corporate exodus since Russia's 2022 invasion of Ukraine that has cost foreign companies more than $107 billion in writedowns and lost revenue, a Reuters analysis

has shown. Many multinational businesses, Mondelez International , PepsiCo, Auchan, Nestle and Unilever , have maintained a presence in Russia.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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