European Banks With Russian Units Help Keep Natural Gas Flowing
(Bloomberg) -- Western banks including Raiffeisen Bank International AG that still operate units in Russia are helping some of the last European buyers of Russian pipeline gas pay for purchases after the US sanctioned Gazprombank.
Turkey and Slovakia are both using the services of Vienna-based Raiffeisen, which runs a unit in Russia, according to people familiar with the matter. Clients broadly are using either the Russian units of Western lenders, or smaller, non-sanctioned Russian banks to pay for gas, said a person familiar with the situation at fuel supplier Gazprom.
The arrangement shows how buyers adapted since the US Treasury banned the use of Gazprombank in November. In 2022, Russian President Vladimir Putin ordered payments for gas to be made in rubles and solely via Gazprombank, but expanded the latter requirement to any bank working in Russia after the lender was sanctioned.
Units of Raiffeisen, Budapest-based OTP Bank Nyrt and UniCredit SpA are among the largest European banks still active in the country even as they cut operations. The Kremlin has made it increasingly difficult for international companies to leave. It has set up a special commission to approve asset disposals and has obliged businesses to sell at a discount and pay an exit tax.
The European banks’ involvement doesn’t violate sanctions, and US officials consider it a success that the measures have forced buyers to shift payments away from Gazprombank, two of the people said, all of whom asked not to be named discussing private matters. Gazprom and Russian natural gas trades in general are not subject to Western bans as officials are wary of fully disrupting supplies to Europe — even though deliveries have fallen from pre-war levels.
Raiffeisen and OTP declined to comment on individual client relations. The Austrian lender said it has significantly reduced payments services to Russia and both banks said they abide by rules and regulations, including international sanctions. UniCredit declined to comment, as did Gazprombank and Gazprom.
On the buyer side, Slovakia’s national energy company SPP — which imports gas via Hungary and the Turkstream pipeline, and has been paying via Raiffeisen — declined to comment as well. A spokesperson for Turkey’s energy ministry also declined to comment.
Some countries, such as Austria and Italy, have stopped receiving Russian pipeline gas since a transit agreement with Ukraine expired at the end of last year and a legal feud ended a long-term supply contract with OMV AG. Austria had also relied on Raiffeisen for its payments, one of the people said.
The banks’ continued presence facilitates remaining business ties between Russia and the West. That offers Putin leverage and, for Western authorities, the ability to monitor cash flows entering or leaving the country.
“Most payments need to keep going, because companies in Germany, Italy and France are still operating there,” UniCredit Chief Executive Officer Andrea Orcel said at a conference on Wednesday. “Let’s talk about the ugly truth: we still buy energy, we still buy commodities, we still buy things from Russia, and that is allowed.”
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