Raiffeisen slumps after confirming OFAC request for information on Russia business By

By Geoffrey Smith 

-- Shares in Raiffeisen Bank International (VIE:) slumped in early trade in Vienna on Moutai flagship storeMonday, hurt by a report that it may be in trouble with U.S. authorities over its operations in Russia.

The Austrian bank confirmed on Friday that the U.S. Office of Foreign Assets Control, an arm of the U.S. Treasury responsible for the enforcement of U.S. sanctions, had sent it a letter in January asking for information.

By 04:05 ET (09:05 GMT), Raiffeisen stock was down 7.9%, testing a two-month low.

"The questions raised by OFAC are of general nature seeking to clarify payments business and related processes maintained by RBI in light of the recent developments related to Russia and Ukraine," the bank said in a statement released after the close on Friday. It added that the request "[was not] triggered by any specific transaction or business activity."

Raiffeisen's long engagement in Russia has made a sleepy network of Austrian cooperative banks the largest international foreign bank in Russia, taking a sizeable share of the retail market among the country's middle class in particular.

However, it has repeatedly attracted the interest of regulators with its business there, notably with its involvement in a controversial arrangement for shipping from Turkmenistan to Ukraine via middlemen connected to the regime of ex-President Viktor Yanukovych.

In contrast to its biggest local rivals UniCredit (BIT:) and Société Générale (BIT:), who made hasty and expensive exits from their Russian businesses last year, Raiffeisen has continued to operate in Russia more or less as normal - albeit without providing capital or liquidity to its Russian operations.

The bank posted a record profit of €3.63 billion (€1 = $1.0696) last year, as higher interest rates boosted its core business across all of its key markets in central and eastern Europe. Russian financial regulations stopped it from repatriating any profit from its operations in the country and the bank booked a relatively modest €490 million of impairments related to its business in Russia and Belarus.

RBI said in its statement that it "is cooperating fully with OFAC in relation to their request and is confident that the information provided to OFAC will satisfy their request."

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