Western banks hand €800m tax to Kremlin in ’23

Seven of the largest European banks in Russia paid over €800 million ($857.636.000) in taxes in 2023 despite pledges to reduce their Russian exposure, a fourfold increase from pre-war levels, The Financial Times reported on Monday.

These banks, including Raiffeisen Bank International (RBI), UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo, and OTP, reported combined profits exceeding €3 billion, three times more than in 2021.

This surge in profitability led to tax payments of about €800 million, up from €200 million in 2021. Over half of these tax payments were from Austria’s Raiffeisen Bank International, whose Russian profits tripled to €1.8 billion between 2021 and 2023.

In 2023, Raiffeisen also paid an additional €47 million due to a windfall levy imposed by the Kremlin.

The RBI, facing criticism from the European Central Bank and the US Treasury, has voiced plans to downsize and divest its operations in Russia following Putin’s invasion of Ukraine in 2022.

Despite a drop since 2022, international banks’ combined revenue, profit, and tax figures remain significantly higher than prewar levels.

The banks have profited from the Russian central bank’s key rate rise to 16 per cent, nearly double the prewar level, earning substantial revenues from floating-rate loans and trapped funds in Russian deposit accounts.

However, due to 2022 regulatory restrictions, these banks cannot access cash earned in Russia as dividend payouts from Russian subsidiaries to businesses in “unfriendly” western countries are prohibited.