Austria's Raiffeisen Bank International (RBI) has defied US pressure and moved ahead with the acquisition of a 28% stake in Austrian construction company Strabag. It is paying for the stake with profits from its Russian banking operation which up to now it has not been able to withdraw from the country.

RBI announced in December that it intended to acquire 28,500,000 shares of Strabag SE via its subsidiary AO Raiffeisenbank, subject to regulatory approvals, merger clearance, and the satisfactory completion of sanctions compliance due diligence. The deal is reportedly worth €1.5bn.

The proposed deal had aroused concerns from the US and the European Central Bank that it violated sanctions by enabling sanctioned Russian oligarch Oleg Deripaska, reportedly the ultimate owner of the Strabag shares, to profit from his frozen shareholding and hence evade sanctions. 

On April 2 RBI said that in recent days, MKAO Rasperia Trading Limited, which owns the Strabag shares, has been sold to Iliadis JSC, an unsanctioned investor, and it still needed to do "extensive compliance verifications" on the new owner.

"Subject to these verifications, Rasperia’s new ownership structure should provide RBI comfort that no sanctioned individuals or entities will benefit directly or indirectly from RBI’s announced acquisition of the Strabag SE shares, nor from any related payments for these shares," it said in a press release.

Deripaska has contested that he should be sanctioned and that he is the owner of the Strabag shares.

RBI, the most significant Western bank still operating in Russia, was reportedly close to dropping the controversial €1.5bn share swap deal with Deripaska due to strong US pressure.  If RBI still goes ahead with the deal, Washington could impose penalties on the bank, Reuters reported last month.  Austrian regulators are also getting cold feet, it said.

RBI had previously backed away from  plans to perform an asset swap with Russia’s largest-state controlled bank Sberbank (Sber) after criticism that it would effectively help Russia’s largest lender to evade sanctions.

The bank has defended the Strabag deal, saying that "RBI diligently verified the compliance of the announced acquisition with all applicable sanctions requirements prior to signing and announcing the transaction".

"Since then, all relevant authorities have been briefed in detail, and on a technical level all outstanding questions are being addressed. RBI stands by its initial assessment that the transaction fully complies with all applicable sanctions requirements," the press release reads.

RBI is under under heavy regulatory pressure to come up with an exit plan from Russia, but the bank would take a massive hit as Russia made up 38% of RBI's net profits in 2023.  RBI has been unable to access the profits it has made there because of Russian central bank restrictions.

It appears that in reality RBI is delaying plans to leave Russia, hoping that the full-scale military invasion of Ukraine will end before the bank will have to cave in to sanctions pressure and scrap its presence in the country. 

RBI says its continuing presence in Russia is essential for enabling the remaining Western companies there to operate. The Russian government also appears to want RBI to stay. 

“Russian authorities made it clear to RBI that they wish it to stay because it enables international payments,” sources told Reuters back in July.