Raiffeisen Bank in Russia is the largest lending institution not subject to sanctions in Russia, so it is very important in trade payments with Russia, including gas exports to Europe.
Russia opposes the sale of Raiffeisen's stake in Russia on concerns that if a Russian investor buys back shares, the bank could also face Western sanctions, a source said.
Raiffeisen is seeking to sell its stake in the Russian branch to a local investor in the hope that Moscow will lift sanctions so that the bank can transfer billions of euros in profits to the country.
Raiffeisen Bank is also under pressure from the US and the European Union (EU) to narrow its operations in Russia due to the conflict in Ukraine.
A Raiffeisen spokesperson confirmed that the bank is negotiating the sale of the Russian branch but could not give a specific deadline due to the need for more approval from regulators, including those in Russia.
The source said that Raiffeisen Johann Strobl's CEO has repeatedly made efforts to sell shares in Russia and personally to Russia to do this.
Raiffeisen's latest share selling efforts have failed as tensions between Russia and the West have increased.
European leaders are preparing to use tens of billions of euros from the Russian Central Bank sent to Belgium to support Ukraine.
Europe also wants to end imports of Russian gas. The shooting down of Russian drones is further escalating tensions.
The two sources said that Raiffeisen is still important to Russia in gas payments and other payments, despite being in a downward trend.
Russia's objection to Raiffeisen's sale of shares stems from a desire to maintain remaining economic connections with Europe, which still buys billions of euros in Russian oil and gas, much less than before the conflict broke out.
A third source familiar with the matter said that Russian officials want to keep Raiffeisen as a money transfer channel to Europe and the bank also plans to continue operating there.
Austria and Russia have had a long-standing relationship since the Soviet era. Austria is also the first Western European country to sign a Russian gas purchase agreement, and Vienna has become an important financial hub for Russia.
Raiffeisen's special status and scale, much larger than other European banks in Russia such as UniCredit (Italy) and OTP Bank (Hungary), helps Raiffeisen in Russia accumulate about 7 billion euros in profits currently stuck in Russia.
If Raiffeisen is sanctioned by the West, Russia will be further isolated for losing an important payment channel.
Raiffeisen handles gas payments sold via the TurkStream pipeline - the only pipeline still carrying Russian gas to Europe after other routes were cut, the two sources noted.
TurkStream supplied about 11.5 billion cubic meters of gas in the first 8 months of this year via Turkey to European countries, including Bulgaria and Hungary.
According to the average gas price on the market, this amount of gas is worth about 3.8 billion USD, an important part of Russian gas exports.
