According to a report by the Financial Times, major European banks operating in Russia paid significantly higher taxes to the Russian government in 2023 compared to the previous year, despite ongoing wartime restrictions on dividend payouts. The seven banks mentioned in the report, including Raiffeisen, UniCredit, Intesa Sanpaolo, ING, Commerzbank, Deutsche Bank, and OTP, collectively paid around 800 million euros ($857 million) in taxes to Russia last year. This amount marks a fourfold increase from the 200 million euros paid in taxes by the same banks in 2021.
Despite the challenging geopolitical environment and Western sanctions imposed on Russia following its invasion of Ukraine, these European banks reported a combined profit of over 3 billion euros in 2023. The increase in profitability contributed to the higher tax payments to the Russian government, as per the Financial Times analysis.
The taxes paid by these major European banks represent approximately 0.4% of Russia’s non-energy budget revenues expected in 2024. This underscores the continued role of foreign companies, particularly European banks, in supporting Moscow’s financial stability amidst international sanctions and the departure of foreign firms following the conflict in Ukraine.
Western sanctions, including the exclusion of Russian banks from the Swift international payment system, have boosted the appeal of Western lenders among Russian clients seeking access to Western markets. This has led to increased business opportunities for European banks in Russia, despite the broader economic challenges.
For instance, Raiffeisen Bank International (RBI) witnessed a significant rise in its Russian profits, reaching 1.8 billion euros in 2023, representing half of RBI’s total profit. However, Raiffeisen has expressed its intention to exit the Russian market. Additionally, the bank paid an additional 47 million euros in windfall taxes imposed by the Kremlin in 2023.
The report by the Financial Times did not include data from U.S. banks such as Citigroup and JPMorgan, as their Russian results are not reported in comparable terms. However, calculations by the Kyiv School of Economics indicate that Citigroup paid $53 million in taxes to Russia last year, while JPMorgan paid $6.8 million.