Raiffeisen Bank Faces Major Legal and Financial Hurdles in Russia

Raiffeisen Bank International faces a legal setback as a St Petersburg court rejects its appeal against a €2 billion damages order to Russian firm Rasperia. This decision solidifies a January ruling, one of the harshest against a Western bank still operating in Russia, while Raiffeisen grapples with frozen assets and geopolitical tensions.

The financial landscape for Raiffeisen Bank International is increasingly tumultuous, as a St Petersburg court dismissed the bank's appeal against a €2 billion damages order to Russian investment entity Rasperia. This development marks a significant reinforcement of the landmark January ruling, imposing one of the stiffest penalties on a Western bank in Russia.

Raiffeisen, which maintains about €6 billion in Russian assets, sought to resolve the matter through a deal to take a stake in the Austrian construction firm Strabag. However, the bank withdrew from the transaction amid suspicions from the U.S. that it would indirectly benefit Russian tycoon Oleg Deripaska.

In response to the complex geopolitical scenario, Raiffeisen CEO Johann Strobl expressed confidence in an Austrian court reclaiming Rasperia's assets in Austria, should the Russian ruling be confirmed. Meanwhile, the bank's Russian unit has provisioned €840 million for potential losses tied to the ongoing legal battle.

(With inputs from agencies.)