After the collapse of the Soviet Union in 1991, the super-smart young stars of the investment bank Credit Suisse First Boston were among the very first financiers from the West to hit the rocks in St. Petersburg. In the years that followed, they often offered themselves willingly when other banks were reluctant to make deals with shady fellows in the new Russian business community. Credit Suisse later became a preferred address for Russian oligarchs wishing to transfer their cash assets abroad. Today, the shaky banking group holds more Russian funds than any other institution in Switzerland or Germany. This also applies to the much larger local rival UBS, which Credit Suisse is now taking over. Many oligarchs are looking at the turbulence in Zurich with some concern – and are hoping for the final rescue of the bank. Because they can’t get their money for the time being.
Switzerland has blocked a total of CHF 46.1 billion in Russian assets. Credit Suisse accounts for CHF 17.6 billion of this – more than a third. The bank is also one of the major players in Russia itself. She cannot leave the country because Vladimir Putin has banned the withdrawal of Western banks. At least the bank has managed to significantly scale back its lending business in Russia in recent months. Some of the 125 employees went on forced leave.
A rule of thumb has been established for global banks in recent years: those who do business with Russia’s oligarchs demonstrate a very high level of risk appetite. And thus sent a clear warning signal to all investors. A good example of this was Deutsche Bank, which received numerous penalties from the supervisory authorities after conducting illegal transactions in Moscow. Only when she got a bloody nose did the bank take action.
One therefore has to worry about some Austrian banks that are still chasing after every ruble. This applies above all to Raiffeisen Bank International (RBI), which now does more business with Russia than any other western bank. While all competitors, even Credit Suisse, have recently tried to reduce Russian assets, RBI continues to grow unabated. The bank makes extraordinarily large profits in Russia, but cannot take them out of the country at the moment. Now an exchange deal with Sberbank, the largest Russian banking group, is supposed to open up a way out. But RBI is getting close to the limits of the sanction rules. The Americans are already increasing the pressure on the Austrians to behave more cautiously.
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What used to be Switzerland for Russia’s oligarchs is now Austria. And what used to be banks like Credit Suisse is now RBI. No other bank is more closely linked to the Russian state and the Russian economy than this particular bank, which grew out of the old cooperative movement. The principle applied there: only do local business in order to minimize the risks. The fact that RBI still uses the name Raiffeisen can only be described as a historical joke.
This article first appeared in Capital.
