The largest Western banks that still operate in Russia paid more than €800m (£684m) in taxes to the Kremlin last year in a sign that foreign companies remaining in the country are helping Vladimir Putin weather international sanctions.
The top seven biggest European banks in Russia posted combined profits of more than €3bn (£2.6bn) last year, a threefold increase on their performance in 2021 – prior to Putin’s invasion of Ukraine.
These profits – from Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP – were partly generated by funds that they are not able to withdraw from Russia due to regulatory restrictions imposed in 2022.
However, the boost in profitability resulted in the seven lenders paying around €800m in tax to Moscow, a roughly fourfold increase from €200m (£171m) in 2021, according to analysis by the Financial Times.
Foreign banks with operations in Russia have received a double boost since its invasion of Ukraine from both higher interest rates and Western sanctions on Russia’s domestic lenders that block their access to international payment systems.
More than half of the taxes paid reportedly came from Austria’s Raiffeisen Bank International (RBI), which has the largest Russian presence of the group despite laying out plans to divest its operations in the country.
RBI’s profits from Russia more than tripled to €1.8bn (£1.54bn) between 2021 and 2023, making up around half of its overall profit – up from roughly a third before the war in Ukraine.
The total amount of tax paid last year represented around 0.4 per cent of Russia’s expected non-energy budget revenues for 2024. The tax was paid despite promises from financial institutions to minimise their Russian exposure after the full-scale invasion of Ukraine.
Spokespeople for Deutsche Bank, OTP and Commerzbank said the banks had significantly reduced their presence in Russia, while UniCredit declined to comment. Intesa’s chief executive said in February that the bank was still trying to finalise its exit from Russia.