Raiffeisen tries to swap €400mn with Sberbank in ‘financial prisoner exchange’ -Dlight News

Raiffeisen tries to swap €400mn with Sberbank in 'financial prisoner exchange'

Raiffeisen Bank wants to exchange €400mn worth of profits trapped in Russia against Sberbank’s frozen cash in Europe, in a plan that underlines the Austrian lender’s efforts to reduce its exposure to the Russian market.

The swap deal, presented at a Raiffeisen board meeting last week, would see Sberbank receive rubles from Raiffeisen’s Russian subsidiary, which are banned from leaving the country due to capital controls imposed by the Kremlin, according to three people directly involved in the discussions.

As part of the so-called “Project Red Bird”, Raiffeisen will in turn handle a pile of legacy cash sanctioned by Sberbank’s European arm.

“Consider this the financial equivalent of a Cold War prisoner exchange,” said one person involved in structuring the deal.

The creative solution is likely to raise eyebrows among Western politicians and policymakers because it would mean allowing Kremlin-owned Sberbank, Russia’s biggest lender, to effectively get back some of its frozen European cash. Any deal would need approval from regulators in Washington, Brussels and Moscow.

A person close to Sberbank warned that the deal would be difficult to finalize because of the complexity of getting permission from US and EU authorities.

“They are transferring the cash . . . to an approved entity,” he said.

The swap is a “theoretical consideration,” a Raiffeisen spokesman said. The Austrian bank was “examining a number of options” on how to reduce its Russia exposure, stressing that any steps would be taken to comply with sanctions requirements.

Raiffeisen illustrates the dilemma many foreign groups with Russian operations faced after Vladimir Putin’s full-scale invasion of Ukraine last year. is an organization based in Vienna The largest Western lender in Russia By assets, it earned record profits there last year.

Under the plan, rubles would be transferred from Raiffeisen’s Russian subsidiary to Sberbank in Moscow. In return, an equivalent amount of euros in escrow accounts belonging to Sberbank’s former European arm – which is in the process of being wound up – will be transferred to Raiffeisen in Vienna.

No money will cross borders, nor will foreign currency be sent to Russia, and thus no sanctions rules will be broken, the people stressed – despite a ban on doing business with Sberbank in Europe.

The Raiffeisen swap proposal was first reported by Austria’s Falter magazine.

Advisers working on the plan drawn up by Vienna-based Ethuba Capital, the consulting firm founded by UniCredit’s east market head Willy Hammetsberger, believe it could be a model for other Western companies trying to exit Russia. Ethuba declined to comment.

Late last year the Kremlin imposed stricter rules on Western businesses still operating in its territory, making it impossible for them to sell their subsidiaries without permission and banning the repatriation of profits from certain critical sectors out of the country.

Raiffeisen executives have expressed dismay at the position they find themselves in. But other Western business leaders have been less controversial. The chief executive of Philip Morris told the Financial Times last month that he would “keep” his Russia business out of duty to its shareholders rather than sell it cheaply because of moral pressure from politicians.

Sberbank did not comment on the deal.

The Russian bank’s European business has been in the process of liquidation for the past few months and has now sold most of its loan portfolio to European rivals.

The cash and other assets from such sales and the closure of other business operations are trapped in a Vienna-based legacy holding company, valued at up to €400mn.

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