European banks exiting Russia would harm both Western and Russian businesses, Kremlin spokesman Dmitry Peskov stated on Tuesday. He highlighted that many Western businesses still operate in Russia and rely on banking services there.
Impact on Banking and Businesses
With most major Russian banks under Western sanctions following Russia’s full-scale invasion of Ukraine in February 2022, foreign banks such as Austria’s Raiffeisen Bank International and Italy’s UniCredit have become crucial financial intermediaries with the West, thereby increasing their profits. Peskov pointed out the essential role these banks play in transferring funds for both Russian and foreign customers.
Regulatory Pressure on European Banks
The European Central Bank’s Banking Supervision has urged all banks with significant exposure to Russia to accelerate their de-risking strategies by setting clear timelines for downsizing and exiting the Russian market. Raiffeisen Bank has faced scrutiny for its substantial profits in Russia and ties to Moscow, receiving a warning from the U.S. Treasury about potential restrictions on its access to the U.S. financial system.
Continued Western Business Operations
Despite the political and economic tensions, many Western businesses continue to operate in Russia. Peskov noted that these companies have significant investments in the Russian market and depend on the services provided by European banks. “If they stop, well, these companies will be just as damaged as our companies,” he remarked.
Corporate Exodus and Remaining Companies
Since Russia’s 2022 invasion of Ukraine, about 1,000 companies have exited the Russian market, resulting in more than $107 billion in writedowns and lost revenue for foreign companies, according to a Reuters analysis. However, several multinational businesses, including Mondelez International, PepsiCo, Auchan, Nestlé, and Unilever, have maintained their presence in Russia.
The potential departure of European banks from Russia presents risks to both Western and Russian businesses. As international regulatory pressures mount, the continued operation and financial stability of companies in the Russian market remain uncertain.
With Inputs from Reuters
