Raiffeisen Bank Shares Plunge Over 8% on Short-Seller's Russia Sanctions Allegations

Shares in Raiffeisen Bank International (RBI) tumbled more than 8% on Thursday after U.S.-based activist short-seller Grizzly Research published a report alleging the lender has been a key channel for circumventing Western sanctions against Russia.

The Short-Seller's Claims

Grizzly Research, which disclosed it holds a short position in RBI's stock, claimed its investigation found evidence linking the bank to $1.19 billion in Russian trade involving goods subject to sanctions and restrictions. The report cited customs records tied to Raiffeisen's Russian subsidiary, AO Raiffeisenbank, as evidence of its deep involvement in Russia's wartime economy.

The short-seller also alleged that RBI has misled investors and regulators about its stated intention to wind down its Russian operations. The report detailed an undercover probe where bank staff allegedly showed willingness to assist prospective clients with transactions related to Russian military customers, drone fundraising, and circumventing U.S. export controls on Iran.

Further allegations in the report include:

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• Trapped Cash Discrepancy: Grizzly questioned RBI's disclosure of roughly €700 million in legally restricted Russian funds, arguing the actual inaccessible amount is over €12 billion.
• Questionable Deals: The report flagged RBI's 2023 sale of its Belarusian unit, Priorbank, at a significant discount to an Abu Dhabi-based company, describing it as a deal that "bears the hallmarks of sanctions circumvention."

Raiffeisen's Rebuttal and Market Impact

Raiffeisen Bank International pushed back against the accusations, stating that an initial review identified "a number of factually incorrect and misleading statements" in the report. The bank defended its internal controls, saying in a statement, "We stand by the strength of our compliance systems, which have been reviewed many times - both prior to and since the start of the full scale invasion."

Despite the bank's denial, the report had an immediate and significant impact on its stock. The allegations raise serious questions for investors about the bank's exposure to Russia and potential regulatory risks, an issue that has been a persistent concern for the market since the 2022 invasion of Ukraine.