FINANCIALS: RBI Russian Unit Shares Frozen: Negative But Not Unexpected

Raiffeisen (RBIAV: A1) has had shares in its Russian bank frozen by Russian court. Another negative in the failing Russian sale story but, following the July publication of accounts “ex-Russia”, we feel most of the spread impact has already been felt. That said, the equity is indicating lower this morning, so there was some (limited?) hope amongst that community. This is a spread negative today but likely most of the bad news is already “in the price”.

• RBI has seen its shares in AO Raiffeisenbank (Russia) frozen with immediate effect by a Russian court. This is tied to a case brought by Rasperia Trading against Strabag, its Austrian shareholders, and the Austrian bank’s unit. RBI owns 100% of this unit.
• RBI had been trying to sell its unit to Oleg Deripaska (who’s reportedly behind Rasperia) in exchange for his stake in Strabag (the Austrian construction firm), which Derispaska cannot access as a sanctioned person. US and, latterly, European pressure led RBI to abandon this deal
• What’s key here is that the bank is now producing accounts “ex-Russia” so the equity market has look-through to the reliable earnings stream (RBI cannot access Russian profits right now). That had led equity investors to value RBI more on an “ex-Russia” basis and spreads were already hit by the c.3pp hit to CET1 from this. So, in our view, few investors are holding out for Russian value, especially on the credit side.