European Central Bank is Pushing European Banks to Exit Russia after Prigozhin's Rebellion
The European Central Bank (ECB) is pushing financial institutions that continue to operate in Russia despite sanctions to accelerate their exit from the Russian market due to a sharp increase in risks after the coup organised by Wagner PMC leader and former Putin chef Yevgeny Prigozhin.
"The ECB has called on banks to accelerate the implementation of their downsizing and exit strategies by adopting clear roadmaps and to report regularly to their governing bodies and the ECB's banking supervisors on the implementation of these plans, as well as to explain delays and/or obstacles in the implementation of these plans," the letter said.
Previously, the Russian market was a significant source of profit for a number of large European banks. Russia's war in Ukraine and international sanctions have called into question the ability of financial institutions to continue operating in the aggressor country's market. However, after more than a year of war, a number of banks have not yet stopped their operations in Russia. Most of these institutions have retained their Russian banking subsidiaries despite "intensive monitoring and intensified dialogue" by the ECB, the letter says.
And while most institutions have decided not to start new business in Russia and are exploring ways to wind down their business in the aggressor country, progress seems to be too slow.
After Prigozhin's rebellion this weekend, "the operational, reputational, legal and financial risks associated with doing business in Russia and Belarus have increased", which requires an intensification of the process of exiting these markets.
In the letter, the head of the ECB's Supervisory Board, Andrea Enria, emphasises that he has repeatedly "publicly expressed concern about the disappointingly slow progress made by banks in mitigating the risks associated with their current operations in the Russian market".
The largest European banking organisations that continue to do business and pay taxes in Russia are Austria's Raiffeisen Bank International (RBI), Hungary's OTP Group and Italy's UniCredit, Reuters reminds.
RBI CEO Johann Strobl said that the organisation is working on scenarios for withdrawing from Russia "at full capacity". Earlier it was reported that the Austrian group is considering the option of selling or separating its Russian business.