Russia Warns Western Banks Against Discrimination
Russia’s central bank has issued a stern warning to subsidiaries of Western banks still operating within its borders, urging them not to bow to pressure from Western regulators and discriminate against Russian clients by restricting services like international money transfers. The warning comes as Western financial institutions face mounting pressure to exit Russia due to sanctions imposed by Western governments in response to Russia’s actions in Ukraine.
Raiffeisen Bank and UniCredit Under Scrutiny
Among the largest foreign banks still operating in Russia are Austria’s Raiffeisen Bank International (RBI) and Italy’s UniCredit. The Russian central bank categorizes these institutions as systemically important, including Hungary’s OTP Bank, which also operates in Russia. Despite Western regulators, including the European Central Bank (ECB), urging these banks to cut ties with Russia, they have remained operational.
The Austrian RBI, which has been the biggest Western bank in Russia, recently faced legal challenges. Earlier this month, a Russian court froze the bank’s shares in its Russian subsidiary, effectively blocking its exit strategy. In a significant move, RBI also halted money transfers abroad for Russian clients starting September 1, 2024.
Russian Central Bank Intervenes
After a recent policy meeting, Central Bank Governor Elvira Nabiullina confirmed that regulatory authorities are pressuring Western banks. “We are seeing pressure,” Nabiullina said. She stressed that subsidiaries of Western banks, established under Russian law, must comply with local regulations instead of foreign sanctions.
New Directives to Prevent Discrimination
In response to these actions, the Russian central bank has introduced strict guidelines aimed at preventing discrimination. Western bank subsidiaries in Russia are now barred from blocking foreign currency transfers or sharing client data with head offices if it may result in discrimination against Russian clients.
Future of Western Banks in Russia
Looking ahead, Nabiullina stated that the central bank will reassess the list of systemically important banks this autumn. However, she declined to reveal whether Raiffeisen and UniCredit would remain on the list, which currently includes 13 institutions, such as heavily sanctioned banks like Sberbank and VTB.
The intensifying conflict between Russian regulations and Western sanctions leaves the future of Western banks in Russia uncertain, making their presence a key point of contention.