(Bloomberg) -- Raiffeisen Bank International AG slashed the volume of its Russian loans and deposits by about a quarter, after the European Central Bank demanded the lender cut its exposure in the country.
Loans to Russian customers fell by about 23% in the third quarter to less than €4.5 billion ($4.86 billion), the Viennese lender said in a statement Tuesday. Customer deposits fell by 25% to about €11 billion.
The pace of decline is the first indication of how Raiffeisen and its Russian customers are reacting to the ECB’s order. The subsidiary no longer offers term deposits and pays zero interest on current accounts, compared with a central bank base rate of 21%. It’s also imposed strict limits on outgoing foreign-currency payments and high fees on services.
The ECB’s order came after stalling efforts to sell the unit in the last two years, hindered by sanctions and regulatory limits in both Russia and the West. A Russian court recently froze shares in the unit, adding to its difficulties.
Still, Raiffeisen booked €1.05 billion of pre-tax profit across the group in the third quarter, more than the €848 million average estimate in a Bloomberg survey.
However, the lender cut its 2024 target for consolidated return on equity in its core countries to 7.5% from 10% due to higher reserves on litigation related to Polish foreign-currency loans. The bank has booked €493 million of such provisions so far this year.
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