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Financing the war: the largest European banks pay millions in taxes to the aggressor country

Darina GertsevaNews
EU banks pay taxes to Russia
EU banks pay taxes to Russia. Source: Created with the help of AI

The largest Western banks remaining in Russia in 2023 paid more than 800 million euros in taxes, which is four times higher than in previous years. Among them, Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP announced a total profit of more than 3 billion euros in 2023.

This was reported in the Financial Times. This increase in profits, which was three times higher than in 2021, is partly due to the inability of banks to withdraw funds from the country. This increase in profits has led to a significant increase in the amount of taxes paid.

EU banks that continue operating in Russia

Foreign lenders not only took advantage of the high interest rates, but also benefited from sanctions against Russian banks that excluded them from international payment systems. This increased the attractiveness of Western banks for clients in Russia.

Despite the efforts of Raiffeisen Bank International to reduce its presence in Russia after the full-scale invasion, some of the announced vacancies indicate ambitious plans to expand its client base.

Other banks, such as Deutsche Bank, OTP and Commerzbank, have significantly reduced their presence in Russia, while UniCredit has not commented. Even with the closure of its corporate and retail businesses, Citigroup continues to increase its profits in Russia, becoming the fourth largest taxpayer among Western banks.

Measures against the Russian financial sector, including restrictions on access to international payment systems, have made Western banks key players in financial interactions between Moscow and the West. Despite the criticism and pressure from international organizations, Western banks continue to increase their presence in Russia, thus demonstrating their importance for the country's financial stability.

The total profits of international banks in Russia have shown a decline since 2022, but still remain much higher than previous pre-war levels. This has happened in the context of the Russian central bank's key interest rate hike to 16 percent, almost double the pre-war level.

Higher interest rates have helped banks generate substantial income from floating-rate loans and accumulate additional profits from funds held in Russian deposit accounts , although banks cannot access these funds due to restrictions on dividend payments introduced in 2022.

As OBOZ.UA reported earlier, in 2023, the amount of Russian assets frozen by the Swiss authorities under sanctions increased by 580 million Swiss francs and reached 13 billion francs (about $14.3 billion). In addition, the investigations resulted in the identification and blocking of two more real estate objects related to the Russian Federation.

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