Western banks in Russia contributed €800mn in taxes to the Russian government last year

The largest western banks remaining in Russia have paid the Kremlin over €800mn in taxes last year, a significant increase from prewar levels, despite promises to reduce their exposure to the country after the invasion of Ukraine. The top seven European banks in Russia reported a combined profit of more than €3bn in 2023, three times higher than in 2021.

The increase in profitability led to European banks paying about €800mn in taxes, up from €200mn in 2021. This tax contribution, equivalent to 0.4% of Russia’s expected non-energy budget revenues for 2024, highlights how foreign companies in the country help maintain financial stability amid western sanctions.

Austria’s Raiffeisen Bank International (RBI) saw its Russian profits triple to €1.8bn in 2023, with half of the group’s total profit coming from Russia. Despite plans to downsize and divest its operations in the country, RBI has faced criticism for not completing the withdrawal.

Other European banks like Deutsche Bank, OTP, and Commerzbank have reduced their presence in Russia, while Citigroup and JPMorgan, US lenders, have also seen profits and tax payments in the country. The imposition of sanctions on the Russian financial sector has increased the appeal of international banks in Russia, serving as a financial lifeline between Moscow and the west.

Despite challenges like regulatory restrictions on dividend payouts and locked-up cash in Russian deposit accounts, western banks continue to benefit from interest rate rises and higher profits in Russia. The banks’ combined revenue, profit, and tax figures have remained significantly higher than prewar levels, showcasing their resilience in the face of geopolitical tensions.