Western banks that remained in Russia pay 4 times more taxes than before the invasion

The largest Western banks that continue to operate in Russia paid more than €800 million in taxes last year, four times more than before the Russian invasion of Ukraine.

Source. This was reported by the Financial Times.

The seven largest European banks in terms of assets in Russia – Raiffeisen Bank, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP – reported a combined profit of more than €3 billion in 2023.

This profit was three times higher than in 2021, and was partly generated by funds that banks cannot withdraw from Russia, the newspaper writes.

According to the Financial Times analysis, the increase in profits led to European banks paying about €800 million in taxes, compared to €200 million in 2021.

The taxes paid by European banks are equivalent to about 0.4% of all expected "non-energy" revenues of the Russian budget for 2024, the newspaper notes.

Foreign banks have benefited not only from higher interest rates in Russia, but also from international sanctions against Russian banks. Such measures have deprived their competitors of access to international payment systems and increased the attractiveness of Western banks for clients in the country.

More than half of the tax payments by European banks are made by Austrian Raiffeisen, which has the largest presence in Russia among the subsidiaries of Western banks.

At the same time, Deutsche Bank, Hungarian OTP and Commerzbank have significantly reduced their presence in Russia, which was already small compared to Raiffeisen.

"We can't do anything with Russian deposits except keep them in securities. So when interest rates went up, our profits went up," a top manager of a European bank with a Russian subsidiary told the publication.

Background. As a reminder, UniCredit Bank, one of the few Western banks that continues to work with Russian individuals and companies, recently announced restrictions on international transfers for its clients in Russia.