RBI could sell 60% of Raiffeisenbank, in preliminary talks with authorities of various countries - CEO

MOSCOW. July 30 (Interfax) - Austria's Raiffeisen Bank International (RBI) could retain 40% of the Russian Raiffeisenbank, group's CEO Johann Strobl said on a conference call on Tuesday.

"We assume that with the highest probability we will be able to sell 60%, and retain 40%," he said.

Strobl said RBI needs approval from at least five institutions - the Central Bank of Russia and the Russian government, the European Central Bank, the Austrian Financial Market Authority and the U.S. Treasury's OFAC.

"We want to mitigate the risks between the potential conclusion of the sale agreement and the closing of the deal, and we are trying to obtain even informal approvals from these institutions. They have different views," Strobl said.

The purpose of interacting with these institutions is to present the terms of a possible deal and the names of potential buyers, he said.

Strobl said the group had not given up the idea of spinning off the Russian business, but "would like to explore all possible options."

In the event of a sale, RBI would want Raiffeisenbank to be valued at approximately 1x equity, possibly less. The Russian division's equity grew 15.6% in Q2 2024 to almost 5.5 billion euros or about 0.5 trillion rubles.

If RBI is unable to sell the Russian division, it will ask the authorities for permission for the subsidiary to pay dividends. "We see that some companies and banks have been able to pay dividends [to their foreign parent companies]. It's hard to predict [the prospects for obtaining such permission]. We will of course ask," Strobl said.

"Until we find a way of exiting Russia, we will speed up the process of scaling back the business," he said, adding that the process would intensify in the coming months. "The Russian bank's business model of the will continue to be streamlined. Essentially, this means the loan book will shrink even faster," he said. The group expects the loan book to decrease 55% by 2026.

The European Central Bank in April sent RBI a request to accelerate the process of winding down its business in Russia. Current recommendations indicate that the loan portfolio must decrease substantially by 65% by 2026 from 6.3 billion euros in the third quarter of 2023. This was 5.8 billion euros in Q2 2024.

The group will not issue new loans in Russia or prolong existing ones, except in certain cases, Strobl said.

RBI will place excess liquidity in ruble deposits at the Central Bank of Russia. "There will be no more deposits on the Moscow Exchange or in Russian banks," Stobl said. The group will provide forex liquidity only to divisions of Western companies.

RBI saw some outflow, but not much after tightening its policy regarding client funds in Russia by lowering rates and introducing commission, Strobl said. He said it would be possible to judge the full impact of the measures later.

The RBI Group's assets in Russia are Raiffeisenbank as well as leasing, insurance and management companies.