Shares in Raiffeisen Bank International fell 9% after a short seller accused the lender of helping Russia evade sanctions. The bank called the report misleading and factually wrong.
Shares in Raiffeisen Bank International fell 9% during trading on September 17 after the short seller Grizzly Research published a report accusing the bank of helping Russia evade sanctions.
Raiffeisen said the report was misleading and contained factual errors. “We remain confident in the strength of our compliance systems, which have been audited repeatedly,” a bank spokesperson said. The spokesperson also said the company has spent years trying to sell its Russian business and leave Russia.
In its report, Grizzly Research called Raiffeisen and its Russian subsidiary “one of the key channels for evading sanctions.” The report’s authors say $1.19 billion in trade with Russia went through the bank, including trade in sanctioned goods used by Russia’s armed forces.
Analysts at Bloomberg Intelligence say Grizzly Research may be exaggerating Raiffeisen’s sanctions risks. In their view, transactions through the bank’s Russian subsidiary are not in themselves evidence of sanctions evasion.
The bigger risk comes from regulators: any close scrutiny from the U.S. Treasury’s Office of Foreign Assets Control or the European Central Bank could further complicate Raiffeisen’s already difficult exit from Russia.
Raiffeisen Bank International’s main asset in Russia is its subsidiary, AO Raiffeisenbank. AO Raiffeisenbank remains the largest Western lender in the country and has not been hit by Western sanctions.
Raiffeisen announced plans to wind down its Russian operations as early as the first weeks of Russia’s full-scale invasion of Ukraine, but it has yet to leave the Russian market.
Russian authorities are blocking the sale of Raiffeisen’s Russian business. Any deal requires their approval, but Moscow wants to keep the bank in Russia as a conduit for settling payments with Western countries, chiefly Europe. At the same time, the United States has pressured Raiffeisen over its dealings with Russia.
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Who is this?
“Short selling,” also known as an uncovered sale, is one of the most common ways investors profit from a decline in a stock’s price. A trader borrows a company’s shares from a broker at a higher price, sells them, and once the price falls, buys them back and returns the shares to the broker, pocketing the difference minus the broker’s commission. Grizzly Research makes no secret of its bias toward the companies it covers.