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Analysts see Russian risk for Raiffeisen

Germany's oldest private bank, Berenberg, has released a report identifying Austria's Raiffeisen bank as being the European institution most vulnerable to knock-on effects from the latest round of sanctions against Russia.

Analysts see Russian risk for Raiffeisen
Berenberg Bank's headquarters in Hamburg. Photo: Berenberg

The EU and US sanctions which are being applied in the wake of Russia's unacknowledged support for separatists in Ukraine's civil war are designed to target selected economic activities, especially in the banking and credit sector.

The European banks with the biggest exposure to Russian loans include Austria's Raiffeisen, Italy's Unicredit (which also has a majority holding in Bank Austria), as well as Commerzbank, Société Générale, Nordea and ING.

The Russian market provided around half of Raiffeisen's profits in 2013.  Default on these loans could significantly impact the bank's profitability in future.

The report also noted a decline in Raiffeisen's share price, which it attributed to a decline in Russia's ruble exchange rate.

“Tier 1 capital dropped 3% (€0.3bn) in 2013 mostly because of the depreciation of the Russian currency” Berenberg’s note says.

But Berenberg suggests that the picture is not entirely bleak for Raiffeisen. It says that the bank could could legally walk away from Russia and write down its investments, although this would occur a loss of €3 billion.

 
Photo: Berenberg Bank

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RUSSIA

Austria slams Russia over cancelled Vienna-Moscow flight

Austria criticised Russia on Thursday after it refused to allow an Austrian Airlines flight to be rerouted to avoid Belarusian airspace, resulting in the Vienna-Moscow service being cancelled.

Austria slams Russia over cancelled Vienna-Moscow flight
(Photo by JOE KLAMAR / AFP)

Austria’s foreign ministry said Russia’s refusal to allow the route change was “absolutely incomprehensible”, urging it “not to artificially impede free air traffic between Russia and Europe”.

“It is in the interests of both Austria and Russia that all flights to and via Russia can continue to be carried out without any problems,” the ministry said in a statement to AFP.

Russian authorities had ‘not approved’ route change

Austrian Airlines cancelled the Vienna-Moscow flight on Thursday, saying Russian authorities had not approved a route change allowing the plane to avoid Belarusian airspace. The airline said it had suspended flights over Belarusian airspace in line with a recommendation by the European Union Aviation Safety Agency (EASA), making a route change for the Vienna-Moscow flight necessary.

“A change in flight routes must be approved by the authorities.

“The Russian authorities did not give us this permission,” the airline said in a statement to AFP.

It added it was not yet clear if the next flight would be able to take place. A Moscow-Vienna flight is scheduled for Friday.

Passengers on the cancelled flight were rebooked, the airline said.

Russia’s transport ministry told AFP that it had “no comment for now”.

Global fury

Belarus sparked global fury by diverting an Athens-to-Vilnius Ryanair plane on Sunday and arresting an exiled dissident in Minsk.

In response, EU leaders on Monday decided to ban Belarusian carriers from European airspace and airports as well as recommending that EU carriers should also avoid Belarusian airspace.

Austrian Airlines is part of Germany’s Lufthansa group. Lufthansa confirmed to AFP that all its airlines were “currently avoiding Belarusian airspace”. Scheduled flights to Moscow and Saint Petersburg continued, it said.

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