The European Central Bank is placing a requirement on UniCredit and Raiffeisen to minimize potential risks associated with their businesses in Russia. In particular, banks need to retain some of their capital, creating a financial cushion.
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Two sources familiar with the situation told Reuters about the existence of these lawsuits that have not yet been openly publicized. According to the ECB, the risks for UniCredit and Raiffeisen are very high because they continue to operate in a country “in which they can no longer effectively control their activities.”
A Raiffeisen representative confirmed that capital storage requirements will change early next year to stricter ones. The ECB and UniCredit declined to comment to the agency. Reuters was also unable to determine the size of the proposed mattress.
According to one of the sources, Raiffeisen must also take into account the risks associated with commercial real estate loans when creating a cushion.
The latest exclusive demands of the European Central Bank to UniCredit and Raiffeisen are explained by the regulator’s discontent with the continuation of their work in the Russian Federation. Although Russian banks are excluded from the international payments network, it is these credit institutions that carry out cross-border payments.
Both banks are gradually reducing their operations in the Russian Federation due to numerous demands by the ECB in accordance with sanctions legislation. But UniCredit is suing the ECB over a demand to cease its operations in Russia: such a request is contrary to international law.
Author:
Ekaterina Alipova
Source: RB
I am a professional journalist and content creator with extensive experience writing for news websites. I currently work as an author at Gadget Onus, where I specialize in covering hot news topics. My written pieces have been published on some of the biggest media outlets around the world, including The Guardian and BBC News.
