The Central Bank of Russia has banned Russian subsidiaries of foreign banks from refusing to allow customers to make money transfers in foreign currencies or create technical obstacles to such operations, the CBR’s Governor Elvira Nabiullina said at a press conference.

This signals more pressure on foreign banks, most notably Austrian lender Raiffeisenbank International (RBI), to continue servicing the Russian economy. They are caught between the rock and the hard place of Russian authorities and Western regulators.

As followed by bne IntelliNews, Raiffeisen Bank Russia announced it will cease all outbound cross-border foreign currency transfers for individuals starting September 2, 2024, following directives from the European Central Bank (ECB) to its parent company. 

“We have recently sent an instruction to subsidiaries of European banks in Russia that prohibits them from refusing to carry out transfers in foreign currencies or create technical obstacles to such transfers on the basis of approaches that do not comply with Russian law,” Nabiullina said as cited by RBC business portal.

The CBR also banned these banks from passing on to parent organisations and other members of a foreign banking group information about customers, including personal data, to form any lists or whitelists. 

Under pressure from the US and the European Central Bank, RBI has been cutting its loanbook and has also cut its share in Russia’s payment market by half.  However, both the ECB and the US have continued to increase pressure on the bank to abandon Russia.

Nabiullina sees the pressure exerted by the ECB as “unacceptable”, arguing that “subsidiaries of European and other foreign banks of the Russian Federation are created under Russian laws, work in the Russian legal field and the execution of the requirements of the ECB and following the sanctions of foreign countries contradict the Russian legal order and discriminate against their clients”.

Most recently RBI's hopes of exiting Russia have suffered another major setback after a Russian court in Kaliningrad banned the sale of its shares following a lawsuit brought by oligarch Oleg Deripaska.

RBI, which has the biggest Western-owned banking operation still left in Russia, has so far defied US pressure  to leave swiftly,  as its Russian subsidiary is so profitable, accounting for half the bank’s income last year, though RBI has not been able to take its profits out of Russia since the invasion. According to some news reports, it is even  still actively hiring staff and growing its business.