Raiffeisen shares slide following U.S. sanctions business asks about Russia

Feb 20 (Reuters) – Raiffeisen Financial institution International’s (RBIV.VI) shares endured their worst everyday fall considering that the onset of the Ukraine war on Monday, immediately after news that the Austrian loan provider has drawn the consideration of U.S. sanctions officials over its Russian company.

Shares in the lender were down 7.6% at 1130 GMT just after it told Reuters on Friday it had obtained a ask for for information from the U.S. Treasury Department’s Place of work of Foreign Assets Handle (OFAC) to “make clear payments business and associated processes managed by RBI in light of the current developments linked to Russia and Ukraine”.

Raiffeisen is deeply embedded in the Russian financial procedure and is a person of the only two international financial institutions on the Russian central bank’s checklist of 13 “systemically significant credit score institutions”, underscoring its significance to Russia’s economic climate, which is grappling with sweeping Western sanctions.

The financial institution instructed Reuters in a assertion on Friday that it is cooperating totally with OFAC and that it recognized the ask for was not brought on by a specific transaction or organization. It stated it experienced processes in position to ensure compliance with sanctions.

The U.S. Treasury can penalise companies that split sanctions, like freezing U.S. belongings and excluding financial institutions from accessing U.S. pounds, something that is crucial for their involvement in international trade and finance.

BNP Paribas Exane analysts downgraded their Raiffeisen score from outperform to neutral about the prospective pitfalls.

Having said that, Erste Team analysts reiterated their favourable stance on Raiffeisen’s stock, arguing that OFAC requests are typical and may possibly not automatically direct to any sanctions.

‘NOT LAST’

Overseas businesses have rushed to minimize their publicity to Russia amid a string of sanctions from Western international locations aimed at derailing Moscow’s war endeavours in Ukraine.

These contain France’s Societe Generale (SOGN.PA), which last year bought its community functions to Russian businessman Vladimir Potanin.

President Vladimir Putin has moved to make it tougher for international banking institutions to pull out of Russia, requiring that any stake revenue be accepted by him to start with.

“No a person desires to be the final Western financial institution functioning in Russia, that is not a terrific seem,” said Daniel Tannebaum, husband or wife in consultancy Oliver Wyman’s Danger and General public Plan Observe and a former compliance officer at the U.S. Treasury.

“I do see a great deal of people today hunting around to see who’s remaining to make confident they are not very last.”

UniCredit (CRDI.MI), which also maintains links with Russia, has not acquired a related ask for from OFAC, a spokesperson for the Italian bank told Reuters on Monday.

Earlier in February, Raiffeisen claimed it earned extra than 50 percent of its 2022 gain from Russia, a market place it is thinking of exiting immediately after the country’s invasion of neighbouring Ukraine.

Raiffeisen’s shares have dropped 34% in price since before the invasion of Ukraine, compared with a 7% attain in the broader European banking stocks index (.SX7P) around the same period.

The selling price of the bank’s bonds also dropped on Monday. Its 500 million euros 1.375% subordinated notes thanks in June 2033 have been down by much more than 2 euro cents, investing at 73/75 cents.

Reporting by Pablo Mayo Cerqueiro, Mark John and Bartosz Dabrowski More reporting by Chiara Elisei Editing by Paul Carrel, Elisa Martinuzzi and Alexander Smith

Our Expectations: The Thomson Reuters Trust Concepts.