VIENNA (Reuters) – Raiffeisen Bank International (RBI) said that a spin-off of its extensive operations in Russia was unlikely by the end of the year, backing away from earlier forecasts.
RBI Chief Executive Johann Strobl said on Friday that this was because the Austrian bank sees “a clear, perhaps easier, path … through a sale”.
One of the banks in Europe most exposed to Russia, RBI has been studying both strategic options for its business in the country since its invasion of Ukraine last year, warning that an exit may take some time.
“On both of these options, we have made good progress,” Strobl told analysts.
Scores of foreign businesses have quit Russia since its full-scale invasion of Ukraine in February 2022 as Western sanctions made it increasingly difficult to stay, but the Kremlin has also introduced measures to control asset sales.
RBI said in a quarterly financial report earlier on Friday that an exit from Russia was “highly complex”.
“The local and international laws and regulations governing the sale of businesses in Russia are subject to constant change,” the bank said.
Russia made up 45% of RBI’s profit in the first nine months of the year, though it reported a 30% decline in the volume of its loans in Russia in the third quarter from a year earlier.
Earnings that RBI makes in Russia stay with the local subsidiary because of Western sanctions.
Strobl, who in early August said RBI was aiming for a spin-off of the Russian business by the end of 2023, later that month would not commit to a timeframe.
Earlier on Friday, Strobl said: “We depend on numerous regulatory approvals from Russian and European authorities and can therefore influence the pace only to a very limited extent.”
The European Central Bank has kept up pressure on banks to loosen ties with Russia but has said it knows that it is not easy to secure approval from local authorities.
RBI on Friday reported a 19% drop in third quarter profit that was nevertheless better than analysts had expected, and its shares were up 6.5% by mid-afternoon.
The profit decline came in part because of lower net fee and commission income and lower income from foreign currency transactions in Russia.
Net profit in the quarter was 879 million euros ($934 million), down from 1.089 billion a year earlier. Analysts had expected a profit of 630 million euros, a consensus forecast published by RBI showed.
($1 = 0.9407 euros)
(Reporting by Alexandra Schwarz-Goerlich; Writing by Tom Sims; Editing by Miranda Murray, Mark Potter and Alexander Smith)