How foreign banks earn in Russia
Negotiations between the Russian Federation and the United States to restore peace in Ukraine affect the policy of foreign banks in the Russian Federation. Structures from the « unfriendly » countries are ready to suspend the curtailing of a profitable business in Russia of their subsidiaries. Moreover, banks with owners from the loyal Russian Federation of jurisdictions consistently increase the presence in the country, and competition intensifies.
Last Friday, April 18, the Financial Times (FT), with reference to sources familiar with the situation, said that the Austrian Raiffeisen Bank International Ag (RBI) suspended attempts to sell the Russian unit against the background of negotiations between Russia and the United States. The group’s decision to pause the process of leaving the Russian Federation is associated with uncertainty in world politics, cites the words of one of the sources of FT. RBI, in turn, said that the process of selling the Russian “daughter” continues, recalling, however, the impossibility of a transaction at the moment due to the decision of the Russian court on the arrest of the shares of Raiffeisenbank.
Despite the declarative statements and demonstrative steps to turn the business in the Russian Federation, Raiffeisenbank is not only in no hurry to leave Russia, but also continues to make a profit. So, in 2024, according to reports on Russian standards, the net profit of Raiffeisenbank increased by 13.7%, and capital – by 22.4%. At the same time, the bank reduction of assets showed symbolic: –4.3% in 2024.
“Kommersant” analyzed the reporting of other banks under the control of foreigners. According to her, only the Korean Bank of KEB Aychengby Bank (–73%), Unicredit-Bank (-26%) and Kommers-Bank (–20%) showed a decrease in net profit last year. The foreigners associated with unfriendly jurisdictions, in conditions of uncertainty, are looking for new ways to optimize their income and find them, analysts note. According to independent experts Yuri Kopteelov, the meaning of the work of foreign banks was classically built on the basis of customer service that are units or “daughters” of foreign companies, plus support for foreign payments, for large commercial banks, a universal model was used (calculations, loans, price lights, retail, currency and stock markets). “The list of services has changed in direct correlation with what roots this or that bank had,” continues Yuri Koptelov. The prevailing relationship between countries, the so-called friendship or unfriendly, are of great importance for the work of the foreigners, the deputy chairman of the Council of Council of Labor of the Russian Federation on the financial, industrial and investment policy Roman Prokhorov agrees.
According to experts, Chinese banks are currently conducting the widest activity in the Russian Federation due to the fact that China and the Russian Federation have the largest volume of business. According to the Main Customs Directorate of the PRC, the turnover of China and Russia, according to the results of 2024, increased by 1.9%, amounting to a record $ 244.819 billion. China over the past 13 years takes the position of the main business partner of the Russian Federation. For example, in one of the largest Russian “daughters” of Chinese banks, China Constantly Construction, net profit in 2024 increased by 24%, and assets – by 269.9%. Reporting at the end of the year « Bank of OF China » and the Chinaselkhozbank is not yet available.
At the same time, the “daughters” of the Chinese banks complicines are quite complicated due to the secondary sanctions that the Chinese are afraid, indicates the deputy chairman of the State Duma Committee Arkady Svistunov: “Others, for example, Iranian or Arabic, have a much smaller business volume, and, accordingly, the activities are more narrowed.” The Belarusian, Kyrgyz, Uzbek, Azerbaijani, Armenian banks also conduct their activities – they have the most active activity, a wide range of operations in the Russian Federation, but compensation has recently been tightened, he continues.
Moreover, regardless of origin, foreign “daughters” are actively using the possibility of earning on the placement of their own funds in the Central Bank. “They place their funds in the Central Bank, because the degree of reliability is the highest for them and there is no conflict of interests here,” Mr. Svistunov explains.
From the point of view of the future, the possibility of opening branches of foreign banks in Russia implies the presence of clear rules and conditions. “Last year, a law was adopted that allows the branches of foreign banks, it unequivocally states that each time the decision to open such a branch will make the Central Bank taking into account certain conditions, the list of permitted operations, that is, not all operations will be allowed,” added Mr. Svistunov.
