EU bank’s shares shoot up on back of Russia deal

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Raiffeisen earlier announced plans for its Russian subsidiary to buy a stake in an Austrian construction group

Shares in Raiffeisen Bank International (RBI) rallied around 12% on Wednesday shortly after the banking group announced plans for its Russian unit to purchase a stake in Austrian construction giant, Strabag.

A complex transaction is expected to help the two Austrian companies reduce their Russian exposure. A 27.78% stake in Strabag is currently owned by Rasperia Trading, linked to sanctioned Russian businessman Oleg Deripaska.

Raiffeisen, which operates the largest foreign-owned bank in Russia, said earlier this week that the subsidiary would buy a stake in Strabag for €1.51 billion ($1.65 billion) and then transfer the shares to its parent via a dividend in kind.

The transaction is expected to lower the amount of Raiffeisen’s capital in Russia by 37.5%, JPMorgan analysts Samuel Goodacre and Mehmet Sevim told the Wall Street Journal.

The lender said the deal does not contradict sanctions requirements, but still needs regulatory approval, including the green light from the Russian authorities for any dividend payments abroad.

Strabag previously said that Deripaska had sold Rasperia, the company that held his shares, to another business, which is likely to allow the Viennese lender to avoid dealing with him directly.

Rasperia acquired shares in Strabag back in 2007. Shareholders of the Austrian construction group recently approved a package of measures designed to dilute the Russian company’s involvement to a level below 2-5%, which would allow it to be excluded from the list of ultimate beneficial owners. It also said this would “reduce the risks to the company’s business” associated with sanctions against Deripaska.

Last year, Raiffeisen said it planned to leave Russia amid Western sanctions over the Ukraine conflict. In March 2023, the group outlined two options, including selling the business and withdrawing assets from the general balance sheet, which would mean taking a massive financial loss. 

In May, Reuters reported that after an unsuccessful search for a third-party buyer, Raiffeisen was inclined to transfer the bank to its own shareholders.

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