Raiffeisen Named Top Foreign Tax Contributor to Russia

Raiffeisen Bank International has emerged as the largest foreign taxpayer in Russia, sparking renewed debate over the role of European banks in the country’s economy amid ongoing geopolitical tensions.

The Austrian banking group paid $402 million in profit tax to the Kremlin last year, according to new research from civil society coalition B4Ukraine and the Kyiv School of Economics. Despite international pressure to scale back its activities, Raiffeisen remains the most significant foreign lender still active in Russia, generating $2.8 billion in revenue in 2024.

Foreign Banks Under Scrutiny

Raiffeisen’s operations highlight the complex position of European lenders in Russia more than two years after the invasion of Ukraine. While many Western companies have exited, banks such as UniCredit, OTP Bank, ICBC, Citigroup, and Intesa Sanpaolo continue to feature among the top foreign taxpayers. Together, the five banks paid around $406 million in profit tax last year.

Although the financial sector generated “modest” revenues of $9.6 billion compared to consumer goods companies, it was the largest profit tax contributor, transferring roughly $1.3 billion to Moscow’s budget in 2024. This underscores the outsized role of foreign banks in sustaining the Russian financial system at a time when sanctions are reshaping global markets.

Challenges of Exiting Russia

Both Raiffeisen and UniCredit have faced mounting legal and regulatory obstacles in attempts to disengage from Russia. Raiffeisen’s planned exit was blocked by a Russian court injunction linked to a lawsuit from companies tied to sanctioned oligarch Oleg Deripaska, involving a $2.2 billion claim. The bank was later ordered to pay €2 billion in damages, a ruling it is currently appealing.

UniCredit has also faced difficulties. Reciprocal sanctions and political constraints have limited potential buyers for its $3 billion Russian business. An Italian court recently upheld a government demand that UniCredit exit Russia as a condition for acquiring Banco BPM, forcing the bank to withdraw its takeover bid.

Regulatory Pressure and Strategic Shifts

European regulators are tightening the screws. The European Central Bank (ECB) has instructed Raiffeisen to reduce its Russian loan book by 65% by 2026, warning of penalties if the target is missed. This pressure comes as foreign banks weigh the risks of remaining in a market where deposits, loans, and credit operations are increasingly politicized.

At the same time, Raiffeisen’s continued profitability in Russia illustrates why some banks have been reluctant to exit abruptly. Customer deposits, mortgages, and loans continue to provide steady revenue, even as digital banking services and international payments have fallen sharply.

Broader Implications for Banking and Geopolitics

The prominence of Raiffeisen and other foreign lenders in Russia highlights a central dilemma for global banking: balancing profitability with reputational and regulatory risks. By contributing to Russia’s tax base, foreign banks risk criticism that they are indirectly supporting state activities, while their home regulators demand accelerated disengagement.

For customers and investors, this situation raises broader questions about how interest rates, credit markets, and digital banking strategies may evolve as European banks restructure in response to geopolitical uncertainty.

Closing Insight

Raiffeisen’s position as the top foreign tax contributor to Russia underscores the high stakes of banking in politically unstable environments. The case illustrates how financial institutions must navigate not only balance sheets and loan portfolios but also shifting geopolitical landscapes. Going forward, banks operating across contested regions will need to weigh short-term profitability against long-term regulatory, reputational, and systemic risks—an increasingly critical balancing act in global finance.

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