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Raiffeisen Bank International: The CEE Banking Pioneer Caught Between East and West
I. Introduction: A Bank in the Eye of the Geopolitical Storm
In Vienna's elegant first district, a few steps from the Ringstrasse, the Raiffeisen Bank International headquarters stands as a monument to Austrian banking ambition. As of June 2025, RBI managed total assets amounting to EUR 204 billion, served 18.1 million customers through approximately 1,400 business outlets, and employed around 42,800 individuals across 11 subsidiary banks in Central and Eastern Europe. Those numbers tell a story of scale and geographic reach that few European banks can match. But they obscure a far more treacherous reality.
RBI, the largest Western lender still operating in Russia, has failed once again to sell its Russian business and withdraw from the country. The bank had found a local buyer for its stake, but Russian authorities blocked the deal out of fears that transferring ownership could trigger Western sanctions against RBI—a crucial financial channel for Moscow.
How did a bank founded on 19th-century cooperative principles to help German farmers escape loan sharks become the most controversial Western financial institution operating in Putin's Russia? And is its position—simultaneously the largest Western bank in Moscow and one of Ukraine's vital agricultural lenders—a brilliant strategic hedge or an existential risk that could unravel the entire franchise?
Austria and Russia have been intertwined since the Russian army's occupation of the country at the end of World War II, when it was handed back its independence on condition that it remained neutral. Austria went on to become the first Western European country to sign a deal to buy Russian gas, and Vienna became a significant financial hub for Russia. Raiffeisen's special status and its size—far larger than the other European banks in Russia, Italy's UniCredit, and the smaller Hungarian group OTP Bank—have allowed RBI to build up roughly €7 billion in profits now stranded there.
The central tension is impossible to ignore: According to the ECB, more than 40% of all payments between Russia and Europe go through RBI. The bank processes payments for TurkStream—Russia's only remaining gas route to the European Union. Raiffeisen processes payments for fuel deliveries through the TurkStream pipeline. Between January and August 2025, Russia exported roughly 11.5 billion cubic meters of gas via TurkStream to Bulgaria, Hungary, Slovakia and other EU states.
To understand how Raiffeisen arrived at this precarious crossroads, we must travel back 160 years to the Westerwald region of Germany, where a young mayor witnessed scenes of rural poverty that would shape the destiny of millions.
II. Origins: The Cooperative Vision (1862–1927)
Picture the Westerwald hills in 1846. Winter has arrived early, the harvest has failed, and families are huddled in stone cottages with nothing to eat. Friedrich Wilhelm Raiffeisen, a 28-year-old mayor of the village of Weyerbusch, watches his constituents starve. Loan sharks circle like vultures, offering credit at rates that will ensure permanent servitude.
Friedrich Wilhelm Raiffeisen was born on March 30, 1818 at Hamm/Sieg in the Westerwald region. He was the seventh of nine children. His father Gottfried Friedrich Raiffeisen was a farmer and also served as the mayor of Hamm. After an eye disease forced him to resign from military service in 1843, he entered public service.
Raiffeisen conceived of the idea of cooperative self-help during his tenure as the young mayor of Flammersfeld. He was inspired by observing the suffering of the farmers who were often in the grip of loan sharks. The famine of 1846-47 became his crucible.
Motivated by the misery of the poor during the winter famine of 1846/47 he founded the "Verein fĂĽr Selbstbeschaffung von Brod und FrĂĽchten" (Association for Self-procurement of Bread and Fruits). He bought flour with the help of private donations. The bread was baked in a community-built bakery and distributed on credit to the poorest amongst the population.
But charity wasn't enough. Raiffeisen came to a radical conclusion: Raiffeisen stated that there is a connection between poverty and dependency. To fight poverty one should fight dependency first. Based on this idea he came up with the three 'S' formula: self-help, self-governance, and self-responsibility. When put into practice, the necessary independence from charity, politics, and loan sharks could be established.
In 1852, Raiffeisen was elected mayor of Heddesdorf, a manufacturing town. He founded a charitable association there, which in 1862 became a credit society where members' deposits served to provide loans for other members. And thus, the first credit union was born!
The model was elegant in its simplicity: farmers pooled their meager savings into a common fund. That fund provided affordable loans to members who needed capital for seeds, equipment, or survival during lean years. Members collectively guaranteed each other's obligations. Trust replaced usury; community replaced exploitation.
To ensure liquidity equalization between the small credit banks, in 1872 Raiffeisen created the first rural central bank at Neuwied, the "Rheinische Landwirtschaftliche Genossenschaftsbank."
Spreading to Austria
The movement crossed into the Habsburg Empire with remarkable speed. In 1870, the grain price plummeted by 80 percent. A rapid increase in farm indebtedness commenced. Every year, between 5,000 and 10,000 farms owned by debt-stricken farmers were subject to compulsory auction.
At the time, it was almost impossible for farmers to obtain loans at reasonable terms to cover their ongoing capital requirements for items such as seeds, operating resources or repairs. Profiteering was rife. The first Raiffeisen bank in Austria was founded in 1886 in MĂĽhldorf, near the village of Spitz an der Donau.
In 1862, he founded the first banking co-operative in Anhausen (Germany), which became a prototype for Raiffeisen banks. The first Raiffeisenbank opened in Austria in 1886, and ten years later the total number of banks in Austria had reached 600.
The Austrian cooperative network grew organically, village by village, until by 1918 more than 2,000 local Raiffeisen banks dotted the new Austrian republic. The incorporation meeting of the shareholders of the Austrian Raiffeisen cooperative was held on August 16, 1927. With this, a central institution was established for the Raiffeisen Banking Group, and since then this institution has functioned as the national and international representative and coordinator for the Group.
Founded primarily as a liquidity equalisation office for the Raiffeisen Banking Group, the company in its first ten years of operation significantly expanded its business activities through the 1930s to include fields such as foreign exchange and currency transactions, lending, acceptance of deposits and investment in securities.
The Raiffeisen idea—that ordinary people could band together to provide financial services to themselves, governed by democratic principles and oriented toward community welfare rather than profit maximization—had taken permanent root in Central European soil. It would prove resilient enough to survive the darkest chapter of the 20th century.
III. The Dark Chapter & Rebuilding (1938–1985)
On March 13, 1938, German forces crossed the Austrian border. The Anschluss—the annexation of Austria into Nazi Germany—happened with shocking speed. In 1938, one day after the German occupation of Austria, the bank was taken over by a provisional German administrator and subsequently nationalised. The bank was not returned to its pre-war owners until 1955.
Following the Anschluss in 1938, the Austrian Raiffeisen banks were subsumed into the German cooperative financial group. The separate Austrian group was recreated in the postwar era, with the Allgemeiner Verband re-established in 1946.
The war years left deep scars. Raiffeisen Zentralbank had charges brought against them by present and former nationals of Austria, and their heirs and successors, who sought compensation for the theft of their property during the Nazi Era and the Second World War.
After liberation in 1945, reconstruction began immediately. Following the end of the Second World War, rebuilding work commenced immediately. Many Austrians were suffering from malnutrition, and policymakers gave the cooperatives considerable responsibility for safeguarding the food supply.
In the 1950s, GZB began to expand and transform its foreign operations. This was also clearly reflected in the bank's growth, with the number of staff rising to almost 200 by 1957. By the end of the 1950s, the bank began to found specialised companies or to invest in them.
Through the 1960s, 1970s, and early 1980s, the Raiffeisen network consolidated its position as Austria's dominant banking force. By the mid-1980s, the cooperative banks collectively commanded about a quarter of the Austrian banking market—an extraordinary market share for a network born from 19th-century farmers' self-help associations.
But the true inflection point came in 1986, when the bank's leadership made a decision that seemed almost recklessly bold at the time: they would venture behind the Iron Curtain.
IV. The Big Bet: CEE Expansion Before the Wall Fell (1986–2000)
In 1986, communism still held Central and Eastern Europe in its grip. Hungary's János Kádár led the "goulash communism" experiment, allowing some economic liberalization while maintaining political control. The Berlin Wall stood firm. Soviet troops remained stationed across Eastern Europe. Most Western bankers considered the region too risky, too corrupt, too unpredictable.
The leadership of Raiffeisen Zentralbank thought differently.
RBI was already active in CEE even before the process of political transition started in the region and the "Iron Curtain" fell: already back in 1986, its first subsidiary bank was founded in Hungary. The bank can therefore look back on almost 40 years of banking experience in the region.
Along with its position as one of the largest commercial and investment banks in Austria, RZB started developing another main area of business already in the 1980s, founding the present-day Raiffeisen Bank in Budapest in 1986. This early strategic decision to expand into Central and Eastern Europe proved to be one of the most important decisions in RZB's history.
Why did Austrian bankers see opportunity where others saw only danger? Geography and history provided the answer. Austria had ruled much of Central Europe for centuries as the core of the Habsburg Empire. Vienna remained connected to Budapest, Prague, and Zagreb by culture, language skills, and collective memory. The fall of the Habsburg monarchy in 1918 was only 68 years in the past—within living memory for many Austrians.
Then, on November 9, 1989, everything changed. East Germans poured through checkpoints in the Berlin Wall. Within months, the communist regimes across Eastern Europe collapsed like dominoes.
In 1989, Genossenschaftliche Zentralbank was renamed Raiffeisen Zentralbank Ă–sterreich AG (RZB). The fall of the Berlin Wall triggered the collapse of the Soviet Union. RZB initiated the expansion of its presence in the countries of Central and Eastern Europe.
Starting from 1989, with the collapse of the communist regimes, RZB focused intensely on CEE, initially founding numerous banks to build up a viable network, which was complemented with acquisitions starting from 2000.
The expansion proceeded with remarkable speed: RZB entered countries like the Czech Republic in 1993, Bulgaria and Croatia in 1994, Russia in 1997, and Ukraine and Romania in 1998.
By 2003, the group had expanded to 15 central and eastern European countries.
The strategic logic was compelling. These were economies emerging from communism with almost no modern banking infrastructure. Populations were educated but underbanked. A rising middle class would need mortgages, car loans, credit cards. Businesses would require trade finance, working capital, investment banking. The first Western bank to build a real network would capture generations of customer loyalty.
RZB wasn't alone in recognizing this opportunity—Erste Bank, UniCredit, and Société Générale all made CEE bets—but Raiffeisen moved faster and built wider. Its network would eventually become the most extensive Western banking presence in the post-Soviet space.
V. Key Inflection Point #1: The IPO & Acquisition Spree (2005–2008)
By the mid-2000s, the CEE bet was paying off spectacularly. The region was booming. EU accession (Poland, Hungary, Czech Republic, and Slovakia joined in 2004) unlocked billions in structural funds. Credit growth exceeded 20% annually in some markets. Property prices soared.
Raiffeisen decided to capitalize on the boom through a landmark IPO.
The Initial Public Offering (IPO) of Raiffeisen International Bank-Holding AG is, with a volume of €1.11 billion, subject to the exertion of the option to cover for over-allotments, the biggest IPO in the history of Austria. It has attracted a record high demand. Biggest IPO in the history of the Vienna Stock Exchange. Record high demand from Austrian retail investors. Offer receives global attention. Book 22-times over-subscribed.
RBI has been listed on the Vienna Stock Exchange since April 25, 2005.
The issue price for the 29.8 million shares on offer has been fixed at €32.5, valuing the deal at €968.5 million. The 13.3 million shares resulting from a capital increase will provide €432.25 million (without the option to cover for over-allotments) which will be used to fund further growth of Raiffeisen International.
The IPO proceeds funded aggressive expansion. In Ukraine, Raiffeisen made its largest acquisition ever. Herbert Stepic, CEO of Raiffeisen International, stated: "The business year 2005 was not only the most eventful, but also the most successful in the history of Raiffeisen International. We have successfully completed the largest IPO in Austrian history and, with Bank Aval, closed the largest acquisition in the long history of Raiffeisen."
The share price performance vindicated the strategy: In April 2005, Raiffeisen International shares were floated on the Vienna Stock Exchange (issue price: €32.50) in the biggest Initial Public Offering in Austria's history. In the course of the year the share price developed favourably and gained more than 70 per cent to €55.55 by year-end.
By 2007, the CEE strategy appeared to be a triumph. Raiffeisen was generating €1.48 billion in profit, with 79% coming from operations abroad. The thesis—rising middle class plus EU integration equals decades of growth—seemed validated beyond any reasonable doubt.
But the boom years were about to end with terrifying suddenness.
VI. Key Inflection Point #2: The 2008 Financial Crisis & Austrian Banking Stress
When Lehman Brothers collapsed in September 2008, the shockwaves hit Central and Eastern Europe with devastating force. The region's currencies, which had strengthened steadily during the boom years, now plummeted. Capital fled emerging markets for safe havens.
The problem for Austrian banks was a loan product that had seemed brilliant during the boom: Swiss franc-denominated mortgages. Local borrowers could access cheaper Swiss interest rates, but took on currency risk. In the boom years, the forint, leu, and złoty strengthened against the franc, making these loans even more attractive. After Lehman, the dynamic reversed violently.
From a time in the middle of 2008 when 141 fiorints could buy one Swiss franc, the cost of francs ballooned up to 254 fiorints, meaning a loan made to a homeowner in Debrecen in that time frame is now about 80.1 percent higher in cost. The €5.4 billion in franc-denominated loans given out by Erste, Raiffeisen and Bank Austria were now in peril.
In the middle of the crisis, Austria approved a €100 billion bailout of its banks.
After the international financial problems of 2008, Raiffeisenbank Chairman Herbert Stepic served as spokesman for a group of 10 central and eastern European banks, which asked the European Central Bank (ECB) to extend their bailout. The bank asked the Austrian taxpayer to buy preferred shares of Raiffeisen valued at €1.75 billion in a capital-raising measure.
The coupons would pay 9.3% annual interest and must be repaid within five years, said an Austrian Finance Ministry spokesman. In 2015 the Raiffeisen Bank made a profit again (379 million euros / $420 million).
The crisis forced a strategic reckoning. In February 2014, Raiffeisen Bank International was reported as reevaluating their participation in the Eastern European and Russian markets, where 57% of Raiffeisen's total assets were. Roughly half of the loans made by Raiffeisen and its subsidiaries in Ukraine were in U.S. dollars, while many loans in Hungary were in Swiss francs. As local currencies tumbled, those loans became more expensive for borrowers to pay off.
The 2008 crisis exposed the dangers of the CEE bet: currency volatility, political risk, economic contagion. But it also revealed something else—the underlying markets continued to grow, and Raiffeisen's early-mover advantage remained intact. The bank decided to stay the course, restructuring rather than retreating.
VII. Key Inflection Point #3: The RBI Restructuring (2010–2017)
The crisis necessitated a fundamental restructuring of the Raiffeisen group. The baroque structure of Austrian cooperative banking—with its multiple layers of regional banks, central institutions, and international holding companies—had become unsustainable.
The subsidiary bank Raiffeisen Bank International was formed, merging Raiffeisen International Bankholding AG and the corporate banking business and related subsidiaries from RZB.
In 2016 the parent company Raiffeisen-Landesbanken-Holding GmbH was merged with Raiffeisen Zentralbank. On 18 March 2017 Raiffeisen Zentralbank merged with subsidiary Raiffeisen Bank International; the latter was the surviving entity.
This was a reverse takeover—the listed subsidiary absorbed its parent. The result was a cleaner corporate structure and, crucially, direct ECB supervision. Raiffeisen Zentralbank Österreich A.G. (RZB) was a significant bank in Austria and the central institution of the Raiffeisen Banking Group (RBG) until its merger into its subsidiary Raiffeisen Bank International (RBI) in 2017. It had subsidiaries held via RBI in, amongst others: Ukraine, Hungary, Czech Republic, Romania, Kosovo, Albania, Bulgaria, Serbia, Bosnia-Herzegovina, Croatia, and Switzerland.
The restructured RBI emerged as Austria's second-largest bank, with a clearer strategic focus on its CEE franchise. 38.83% of Raiffeisen Bank International is owned by free float. 61.17% is owned by regional Raiffeisen banks. 8 regional Raiffeisen banks are owned by 285 Raiffeisen banks. 285 Raiffeisen banks are owned by approximately 1.7 million members (primarily private individuals).
This ownership structure—with Austrian cooperative banks holding the majority and public shareholders holding a significant minority—would prove crucial in the coming years. The cooperative owners had patient capital and long time horizons; the public shareholders demanded returns and transparency.
Throughout this period, one market grew steadily more important to RBI's profitability: Russia. The largest of these subsidiaries by far was Raiffeisenbank (Russia) which accounted for 74 percent of the company's pretax profit.
VIII. Key Inflection Point #4: Russia's Invasion of Ukraine & The Existential Crisis (2022–Present)
On February 24, 2022, Russian tanks rolled across the Ukrainian border. For Raiffeisen Bank International, the invasion created an impossible strategic dilemma: the bank was simultaneously one of the largest Western lenders in both aggressor and victim nations.
Russia: The Profit Engine
Despite promises to exit Russia, Raiffeisen's Russian profits more than tripled to €1.8bn between 2021 and 2023, making up half of the group's total profit, compared with about a third before the full-scale invasion of Ukraine.
The bank's net fee and commission income in Russia increasing threefold from €420mn in 2021 to €1.2bn in 2023. Such factors contributed to the bank's net fee and commission income in Russia increasing threefold from €420mn in 2021 to €1.2bn in 2023.
In addition to its regular tax contributions, which amounted to €464mn in 2023, the bank paid €47mn to the Kremlin due to a windfall levy imposed on certain companies last year.
Amid this profitability, the Russian division of Raiffeisen increased employee pay by €200mn in the first half of 2023, an equivalent of €22,000 payout per employee.
Regulatory and Political Pressure
The continued presence in Russia drew fierce criticism from multiple quarters.
In May 2024, the United States Treasury Department warned that Raiffeisen is at risk of having its access to the US financial system curtailed because of its operations in Russia.
Raiffeisen had previously attempted to purchase these shares by swapping them for its assets in Russia, but the deal fell through in May 2024 following concerns that it would enable Deripaska to circumvent US sanctions.
The €2 Billion Russian Court Ruling
In January 2025, a Russian court delivered a devastating blow.
In the legal proceedings initiated by Rasperia Trading Limited against STRABAG SE, STRABAG SE's Austrian core shareholders and RBI's wholly owned Russian subsidiary AO Raiffeisenbank, a Russian court has today rendered its verdict. The court has decided that STRABAG SE and its Austrian core shareholders are liable to pay EUR 2.044 billion to Rasperia and that the verdict can be enforced against AO Raiffeisenbank's assets.
Raiffeisen Bank International AG has announced it will record a provision in its fourth-quarter financial statements following a Russian court ruling that could cost its Russian subsidiary over €2 billion in damages. The case is related to Rasperia Trading, previously controlled by sanctioned Russian billionaire Oleg Deripaska, against construction firm Strabag SE.
Max Hammer, Human Rights Campaigner at BankTrack, stated: "This case highlights that companies are not engaging with an honest broker in the Russian government but are instead dealing with a rogue state that flouts the rule of law."
Raiffeisen Bank International AG lost its appeal of a court decision ordering it to pay more than €2 billion in damages to a company formerly owned by sanctioned Russian billionaire Oleg Deripaska.
The Exit Problem
RBI Chief Executive Johann Strobl has made several attempts to divest the Russian business and has even visited Moscow to pursue a deal. Since the invasion, the bank has accumulated around €7 billion in profits in Russia—funds that remain effectively trapped in the country.
Raiffeisen Bank International AG wants to leave Russia but that decision isn't necessarily up to the firm, Chief Executive Officer Johann Strobl said.
RBI CEO Johann Strobl said: "We continue to reduce our business in Russia regardless of geopolitical developments. In parallel to the business reduction, we keep working on a sale of our Russian subsidiary and are talking to several interested parties. It remains to be seen whether geopolitical developments will facilitate the exit from Russia."
Current Status (November 2025)
Consolidated profit 1-9/2025 at EUR 1,027 million for the core group (excluding Russia). Main revenues of EUR 1,561 million, up 2% q-o-q. Loan origination accelerated in Q3 across CE and SEE. CET1 ratio excluding Russia at 15.7% (group CET1 ratio at 18.2%). Business reduction in Russia ahead of schedule.
The loan volume in Russia was reduced by 30 per cent. At the end of 2024, it amounted to just 4.2 billion euros.
A Russian court in 2024 ordered RBI, the biggest Western lender still operating in Russia, to pay 2 billion euros in damages to Rasperia and take ownership of the Strabag shares. RBI paid the damages but said that the shares could not be transferred because the Russian court ruling has "no binding effect in Austria" and the shares themselves remain frozen under EU sanctions.
The European Union is considering unfreezing 2 billion euros worth of shares in Austrian construction group Strabag once linked to sanctioned Russian tycoon Oleg Deripaska and handing them to Raiffeisen Bank International as compensation for damages ordered by Russian courts.
IX. The Business Model Today
Despite the Russia crisis, RBI remains a formidable CEE banking franchise.
Geographic Footprint
Net interest income is distributed geographically as follows: Eastern Europe (28.1%), Central Europe (27.8%), South-Eastern Europe (24.1%), Ukraine (6.8%) and other (13.2%).
RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. Subsidiary banks cover 11 markets in the region. In addition, the Group includes numerous other financial service providers active in areas such as leasing, asset management, factoring and M&A. In total, around 43,000 RBI employees serve 17.9 million customers from more than 1,400 business outlets, the vast majority of which are in CEE. At year-end 2024, RBI's total assets stood at €200 billion.
Ukraine Operations
Remarkably, Raiffeisen has maintained and even expanded its Ukrainian operations during the war.
Raiffeisen Bank is Ukraine's largest private bank and its largest foreign bank. The agricultural sector is one of its focus areas.
In a recent conversation with representatives from Raiffeisen Bank Ukraine, one message stood out loud and clear: Resilience. For the third consecutive year, amidst the challenges of a full-scale war, the bank has not only continued to finance Ukrainian businesses but has also significantly expanded its focus on sustainability. Their "green" loan portfolio grew by an impressive 75% over the past year.
The second RSF, totaling €150 million, comprises contributions of up to €50 million from IFC and $50 million from DFC, with a focus on midcaps. Approximately 30 percent is expected to finance longer-term renewable energy generation and energy-efficiency projects to bolster Ukraine's energy security.
Financial Profile
In 2024 the company made a revenue of $9.43 Billion USD a decrease over the revenue in the year 2023 that were of $9.81 Billion USD.
Consolidated profit 2024 of EUR 975 million for the core Group (excluding Russia and Belarus), including EUR 649 million provisions for CHF and EUR mortgage loans in Poland. Net interest income for the core Group stable at EUR 4,155 million while net fee and commission income improves 5% to EUR 1,845 million.
The bank achieved a 14.0% return on equity excluding Russia in Q3 2025 and 10.0% for the first nine months of the year.
X. Strategic Analysis: Porter's Five Forces
1. Threat of New Entrants: LOW-MEDIUM
Banking remains heavily regulated with significant capital requirements. RBI's 40-year track record and local relationships create substantial barriers. However, digital-only banks and fintechs are entering CEE markets with increasing success. Neobanks and fintech platforms such as Revolut and N26 are both a challenge and a source of inspiration for RBI. Strobl admits that legacy systems and traditional processes can hinder improvements, but sees competition as a catalyst for modernization.
2. Bargaining Power of Suppliers (Capital/Deposits): MEDIUM
The cooperative structure provides a stable funding base. The regional Raiffeisen banks hold 61.17 per cent of RBI's shares. These patient shareholders provide capital stability that pure public companies lack. However, ECB supervision adds regulatory capital constraints that limit flexibility.
3. Bargaining Power of Customers: MEDIUM-HIGH
Corporate clients have alternatives from UniCredit, Erste, and local banks. Austria's banking sector is dominated by four main banks. Erste Group Bank and Raiffeisen Bank International AG are the main home teams, competing with smaller Ă–sterreichische Volksbanken AG. UniCredit Bank Austria AG, a unit of Italian financial powerhouse Unicredit S.p.A. is also a major player. In CEE retail, RBI often has local dominance, but switching costs are declining with digital banking adoption.
4. Threat of Substitutes: INCREASING
Digital payments, cryptocurrencies, and alternative lending platforms are fragmenting traditional banking revenues. The bank is investing in digital transformation, enhancing customer data platforms with advanced machine learning models.
5. Competitive Rivalry: HIGH
The three leading banks of Austria: Erste, Raiffeisen and Bank Austria (the latter belongs to Italian UniCredit) are market leaders in the Visegrad countries and also in our immediate region, with only the Belgian KBC keeping pace with them. OTP from Hungary, Santander from Spain and Intesa from Italy are also important players.
While Raiffeisen Bank International, Erste and UniCredit all posted strong results, the best player and winner of the CEE's best bank award for 2021 is OTP Group.
XI. Strategic Analysis: Hamilton's Seven Powers
1. Scale Economies: MODERATE
Regional scale enables shared technology and risk management platforms. However, each country requires local compliance and operations, limiting the benefits of centralization. The CEE network provides some procurement leverage and back-office synergies.
2. Network Effects: LIMITED
Corporate client referrals across CEE create some network value. Payment processing networks generate modest positive feedback loops. But banking is not inherently a network effects business.
3. Counter-Positioning: HISTORICALLY STRONG, NOW PROBLEMATIC
The CEE-first strategy in 1986 was classic counter-positioning—Western banks considered the region too risky, giving Raiffeisen first-mover advantage. However, the Russia position has become extreme counter-positioning that threatens the entire franchise. The bank is caught in a position where neither staying nor leaving seems optimal.
4. Switching Costs: MODERATE-HIGH
Corporate treasury relationships are sticky—changing primary banking relationships requires significant effort. Retail banking switching costs exist but are declining with digital account portability.
5. Branding: STRONG IN CEE
The gable cross was originally a symbol for a protected house and used to be added to the roof gable to protect the occupants against all dangers. Today, the gable cross is one of Austria's best-known brands and the leading brand amongst Austrian financial service providers.
6. Cornered Resource: WEAK
Banking licenses and regulatory approvals provide some protection, but RBI has no unique technology or intellectual property that competitors cannot replicate.
7. Process Power: MODERATE
Decades of CEE experience have embedded organizational knowledge about operating in complex regulatory environments. This institutional expertise is difficult to replicate quickly.
XII. Leadership and Governance
The man navigating RBI through its existential crisis is CEO Johann Strobl, who took the helm in March 2017.
Johann Strobl was born September 18, 1959. He earned a Doctor of Economics and Business Administration from Vienna University of Economics and Business.
Johann Strobl, CEO of Raiffeisen Bank International, has over four decades of experience. Strobl shares his journey from academia to the top of one of Central and Eastern Europe's leading banks.
Dr. Strobl was previously employed as a Director & Chief Risk Officer by Raiffeisen Zentralbank Ă–sterreich AG, a Member-Divisional Board by Bayerische HypoVereinsbank AG, a Head-Risk Controlling by Bank Austria AG, a CFO, Director & Chief Risk Officer by Sparkasse Stockerau AG.
Strobl's background in risk management has proven essential during the Russia crisis. Strobl reflects on his professional beginnings, emphasizing that his career was shaped by a series of formative events rather than a single defining moment. From academic setbacks that redirected his focus to crisis moments in banking, he credits influential mentors and strong teams for his growth.
His management style emphasizes adaptation: Strobl admits that legacy systems and traditional processes can hinder improvements, but sees competition as a catalyst for modernization. He draws parallels with Clayton Christensen's theory of disruption, noting that established institutions must adapt or risk being overtaken by more nimble competitors.
XIII. Bull Case and Bear Case
The Bull Case
1. CEE Franchise Value RBI's network of subsidiary banks across 11 CEE markets represents decades of accumulated customer relationships, local regulatory expertise, and brand recognition. As these economies continue converging toward Western European living standards, banking revenue should grow.
2. Capital Strength Even assuming complete loss of the Russian subsidiary, RBI maintains robust capital ratios. RBI is maintaining a strong capital position to absorb a potential worst-case scenario in Russia, with its CET1 ratio at approximately 15.9%, calculated assuming a complete loss of equity if Raiffeisenbank Russia were deconsolidated.
3. Rating Agency Recognition Progress in efforts to wind down operations in Russia and the bank's successful exit from Belarus, announced last September, received positive recognition from rating agencies, with Standard & Poor's upgrading RBI's outlook from 'negative' to 'stable' at the end of March, specifically citing 'significant progress in winding down operations in Russia' as a key factor.
4. Ukraine Reconstruction Optionality If the war ends, RBI's position as Ukraine's largest private bank could prove enormously valuable during reconstruction. The bank is already positioned with IFC and DFC partnerships to capture reconstruction financing.
5. Attractive Valuation The stock trades at a significant discount to book value, pricing in worst-case Russia scenarios that may not materialize.
The Bear Case
1. Russia Exit Uncertainty The bank had found a local buyer for its stake, but Russian authorities blocked the deal out of fears that transferring ownership to local investors could trigger Western sanctions against RBI, a crucial financial channel for Moscow. The bank may be trapped indefinitely.
2. Regulatory Escalation Risk The US Treasury has warned about potential curtailment of dollar access. In May the US reportedly warned RBI that its access to the US financial system could be curbed because of its continuing presence in Russia. Actual sanctions on RBI would be catastrophic.
3. Stranded Profits RBI's profits, estimated at about €7 billion, are "stuck" in Russia. These profits may never be repatriated.
4. Continued Russian Legal Risk The €2 billion court ruling may not be the last. Operating in Russia exposes RBI to arbitrary judicial actions with no effective recourse.
5. Reputational Damage Continued Russia presence damages RBI's reputation with ESG-focused investors and potentially with customers in other markets.
6. Polish FX Mortgage Litigation Regarding Poland, the bank expects the EUR 300 million provision for litigation on FX mortgages to be sufficient for 2025, with 2026 provisions potentially in the range of EUR 220-250 million. This legacy issue continues to consume capital.
XIV. Key Performance Indicators to Track
For investors monitoring RBI's ongoing situation, three KPIs matter most:
1. Russia Loan Book Size The primary measure of de-risking progress. Business operations in Russia are being heavily scaled back also in accordance with ECB requirements; since the start of the war, loan business has already been reduced by nearly 70 per cent. Tracking the remaining Russian exposure (currently €4.2 billion) relative to ECB requirements provides the clearest signal of exit progress.
2. CET1 Ratio (Excluding Russia) This metric shows the core group's capital strength independent of the trapped Russian entity. CET1 ratio excluding Russia at 15.7%. Maintaining this ratio above 14% provides cushion for complete Russia write-off.
3. Core Group Return on Equity The bank achieved a 14.0% return on equity excluding Russia in Q3 2025 and 10.0% for the first nine months of the year. This demonstrates whether the underlying CEE franchise can generate acceptable returns without Russian profits.
XV. Conclusion: The Cooperative Spirit Meets Geopolitical Reality
Friedrich Wilhelm Raiffeisen could never have imagined that his movement to help German farmers escape loan sharks would evolve into a €200 billion banking group caught between Moscow and Washington. Yet in a strange way, the current crisis connects to his original vision.
Raiffeisen believed in patient capital—in financial institutions that served communities over generations rather than chasing quarterly returns. The cooperative ownership structure that still underpins RBI embodies that philosophy. The Austrian regional banks that control 61% of RBI's shares have horizons measured in decades, not quarters.
That patient capital is being tested as never before. As the conversation draws to a close, Strobl shares how tough times allowed him to learn a lot, meet new people, and recognize what is truly important.
The outcome remains genuinely uncertain. RBI could emerge from the Russia crisis as a focused, profitable CEE bank with a clean balance sheet and renewed strategic clarity. Or it could find itself progressively sanctioned, its franchise value destroyed by circumstances beyond management's control.
What is certain is that RBI's story—from 19th-century German cooperatives to 21st-century geopolitical flashpoint—represents one of the most consequential case studies in modern European banking. The gable cross that symbolizes protection now hangs over a bank that needs all the protection it can get.
MYTH VS. REALITY BOX
Myth: RBI is profiting from the Ukraine war by staying in Russia.
Reality: The situation is more complex. While Raiffeisenbank Russia has been extremely profitable, those profits are effectively trapped and cannot be repatriated. Those profits were partly generated by funds that the banks cannot withdraw from the country. The €7 billion stranded in Russia may never reach RBI shareholders.
Myth: RBI can leave Russia whenever it wants.
Reality: In October 2022, President Vladimir Putin banned the sale of stakes in 45 banks owned by investors from "unfriendly" countries without government sign-off. RBI requires Russian government approval to exit, which Moscow has repeatedly blocked.
Myth: RBI's Russia business helps fund Russia's war.
Reality: Partially true, but complicated. RBI has reduced its Russian loan book by nearly 70% since the invasion. However, it continues to process critical payment flows including for gas exports. Critics argue any continued presence supports the Russian economy.
Material Regulatory Risks: RBI operates under direct ECB supervision as a Significant Institution. The US Treasury OFAC has issued warnings about RBI's Russia operations. The bank faces ongoing litigation in Poland over foreign currency mortgages, with provisions exceeding €300 million annually. Russian court rulings totaling €2+ billion have resulted in asset seizures from Raiffeisenbank Russia. Austrian central bank has confirmed it will not take enforcement action against RBI over alleged sanctions breaches as of August 2025.
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