MOSCOW, Sept 13 (Askume) – Russia’s central bank warned subsidiaries of Western banks in Russia not to succumb to pressure from Western regulators and to protect their Russian clients by refusing to provide services such as overseas remittances.
Austria’s Raiffeisen Bank International (RBI) (RBIV.VI) and Italy’s UniCredit (CRDI.MI) are the largest foreign banks doing business in Russia, and Western regulators, including the European Central Bank, are putting pressure on them. Both banks are on the central bank’s list of systemically important banks. The Hungarian OTP also has operations in Russia.
Earlier this month, a Russian court froze the Reserve Bank of India’s stake in the local branch, preventing Russia’s largest Western bank from exiting. The Austrian bank stopped transferring its Russian clients abroad from September 1.
“We are seeing pressure,” central bank Governor Elvira Nabiullina said at a news conference after the policy meeting.
“The subsidiaries of European and other foreign banks in Russia are established under Russian law. Complying with the requirements of the European Central Bank and complying with foreign sanctions is a violation of Russian law and discriminates against their customers. This is true,” he said.
Nabiullina said Russian regulators have issued instructions to Russian subsidiaries of Western banks prohibiting them from refusing to process foreign currency transfers or creating technical obstacles to such transfers.
Nabiullina accused the Western bank’s subsidiaries of practicing “segregation” among Russian clients, serving some and arbitrarily refusing service to others.
Regulators also barred subsidiaries from providing their headquarters with information about Russian customers that could be used to discriminate against them, he said.
“The only exception is that payments cannot be processed without the information,” he said.
Nabiullina said the central bank would review the list of systemically important banks this autumn, but declined to say whether Raiffeisen and UniCredit would be removed from the list, which currently includes 13 banks including banned lenders Sberbank and VTB.
The designation means greater state support in crisis situations.
When Russian competitors were unable to connect to the international SWIFT payment system, Western bank subsidiaries in Russia earned huge profits from commissions on international transfers. They also provide services to Western companies residing in Russia.
Nabiullina’s announcement signals more problems for Western banks that are stuck in Ukraine and unable to leave Russia, as a war of words rages between Russia and Western regulators.
The Indian central bank has repeatedly disappointed US and European officials , who have pressured the Indian central bank to reduce its exposure to Russia since the 2022 invasion of Ukraine.
