In a bold move reflective of mounting geopolitical tensions, the U.S. Treasury has reportedly issued a written warning to Raiffeisen Bank International (RBI), threatening potential limitations on the bank’s access to the American financial system due to its ongoing dealings in Russia.
The correspondence from the U.S. Treasury, dated May 6, was sent by Deputy Secretary Wally Adeyemo. He voiced his apprehension about RBI’s expanding footprint in Russia, running counter to the bank’s prior commitments to scale down its Russian operations. Highlighting the issue, Adeyemo stated, “Raiffeisen’s extending activities would contradict assurances RBI had given to the Treasury that they were trying to wind down in Russia.”
The Deputy Treasury Secretary’s message carried significant weight, as it bore the warning that RBI’s actions heightened the risk of the Treasury taking measures to curb the bank’s access to the U.S. financial system—a move that could be debilitating, given the dollar’s foundational role in global finance.
The controversy surrounding Raiffeisen Bank was intensified by its involvement in a since-abandoned $1.5 billion deal with a sanctioned Russian tycoon, Oleg Deripaska. Adeyemo referenced President Joe Biden’s Executive Order on secondary sanctions against foreign financial institutions tied to Russia’s military-industrial base, underscoring the severity of potential actions against RBI.
The stakes are high for the Austrian lender, which serves as a significant conduit for Russian money flows to the West, offering access to euros and dollars. RBI’s presence in Russia, with its corporate and individual clients, makes it a systemically important credit institution as per Russia’s central bank. Despite this, the bank has been facing intense scrutiny from international regulators and has made public its intentions to spin off its Russian operations.
The U.S. Treasury’s stern message to RBI reflects a broader frustration. As noted by London Business School Professor of Economics Richard Portes, “The U.S. is losing patience. Enough is enough,” he said, indicating that the flow of Russian money through Western banks has been undermining the effectiveness of U.S. sanctions.
A spokesperson for Raiffeisen stated that the bank has “significantly reduced” its activities in Russia and has taken extensive measures to mitigate the risks from sanctions. Furthermore, they added that RBI aims to continue working towards the de-consolidation of its Russian subsidiary. The Austrian finance ministry, too, has acknowledged the bank’s pledge and assumes compliance with all sanctions.
Relevant articles:
– U.S. warned Raiffeisen Bank access to dollar system could be curbed over Russia, reuters.com, 05/19/2024
– Russian tycoon Deripaska calls latest US sanctions ‘balderdash’, Yahoo News UK, 05/16/2024
– America issues warning to EU bank over operating with Russia, MENAFN.COM, 05/16/2024
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