Raiffeisenbank in Russia to Book a Provision for 4Q/2024

Raiffeisen Bank International (RBI) has announced that its Russian subsidiary, AO Raiffeisenbank, will book a provision for the fourth quarter of 2024 following a recent Russian court decision. The verdict relates to legal proceedings brought by Rasperia Trading Limited against STRABAG SE, its Austrian core shareholders, and AO Raiffeisenbank. The Russian court ruled that STRABAG SE and its Austrian core shareholders owe EUR 2.044 billion to Rasperia, which can be enforced against AO Raiffeisenbank's assets. AO Raiffeisenbank intends to appeal the verdict and will take legal actions in Austria to mitigate potential losses, complying with EU sanctions.

The provision will reflect the awarded amount minus anticipated proceeds from actions against Rasperia's assets, including STRABAG SE shares under EU sanctions. The decision to transfer ownership rights of these shares to AO Raiffeisenbank cannot be enforced in Austria due to legal restrictions. This development has significant implications for RBI's financial performance, strategic plans for Russia, and its relationship with STRABAG SE and its Austrian core shareholders.

The provision booking will have a substantial impact on RBI's financial performance in 2024. The provision will reflect the amount awarded to Rasperia by the Russian court (EUR 2.044 billion) minus the expected proceeds from enforcement of legal recourse against Rasperia's assets in Austria. These assets include 28.5 million STRABAG SE shares, attached dividends, and a cash distribution from the March 2024 capital reduction. The provision will be booked in accordance with IFRS and Russian accounting standards.

The ruling has also affected RBI's strategic plans for Russia. The appeal and legal actions in Austria highlight the ongoing challenges and uncertainties in the Russian market. The strategic plans for Russia, which previously included the potential sale or spin-off of Raiffeisenbank Russia and deconsolidation from the RBI Group, may be further complicated by this development. The provision booking and ongoing legal actions could affect RBI's capital position and financial performance, potentially influencing the timeline and feasibility of the strategic plans for Russia.

The Russian court's decision has significant implications for RBI's relationship with STRABAG SE and its Austrian core shareholders. The financial liability could strain RBI's relationship with STRABAG SE and its Austrian core shareholders, as it may lead to increased scrutiny of their financial dealings and potential losses. The court case and the subsequent ruling could negatively impact the reputation of STRABAG SE and its Austrian core shareholders, potentially harming their business relationships with other partners, including RBI. The ruling has opened up the possibility of further legal disputes between RBI, STRABAG SE, and its Austrian core shareholders. RBI, as a European bank, must ensure it complies with EU sanctions, which could lead to further tensions with STRABAG SE and its Austrian core shareholders if they have differing views on how to handle the situation. If the situation is not resolved, RBI might consider divesting its Russian operations to avoid further losses and reputational damage, which could potentially lead to a reassessment of its relationship with STRABAG SE and its Austrian core shareholders.

In conclusion, the Russian court's decision has significant implications for RBI's financial performance, strategic plans for Russia, and its relationship with STRABAG SE and its Austrian core shareholders. The provision booking, appeal, and legal actions highlight the ongoing challenges and uncertainties in the Russian market, which may affect RBI's capital position, financial performance, and strategic plans. The ruling also raises questions about RBI's relationship with STRABAG SE and its Austrian core shareholders, potentially leading to further legal disputes and reputational damage. As RBI navigates these challenges, it will be crucial for the bank to maintain a strong financial position and comply with relevant regulations and sanctions to mitigate potential losses and preserve its integrity in the market.