According to a report by the Financial Times (FT) on April 29, the prominent Western banking institutions that have maintained their operations in Russia have contributed significantly to its budget through taxes, amounting to 800 million euros ($857 million) in 2023—an increase that is quadruple the pre-conflict period amount.
In the year following the outbreak of hostilities with Ukraine in 2022, the Russian banking sector faced severe restrictions from the global financial system and was burdened with extensive sanctions from the West, which resulted in a sharp 90% drop in profits when compared to the previous year’s figures.
However, the situation has turned around, with Russia’s banking industry reporting robust performance. The state-controlled Sberbank revealed a historic high annual profit of $16.3 billion for 2023, marking an increase of more than five times over the previous year.
A group of seven major European banks—comprising Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo, and OTP—posted a combined total of over 3 billion euros ($3.2 billion) in profit in 2023, tripling their earnings from 2021.
These heightened profits led to the banks paying approximately 800 million euros in taxes, a notable surge from the 200 million euros ($214 million) seen in 2021, as per the FT’s analysis. This calculation includes the contributions from American financial institutions like Citigroup and JPMorgan.
As reported by the FT, the taxes submitted by these banks account for nearly 0.4% of Russia’s total projected non-energy budget revenue for 2024.
“Such activities by foreign entities within the nation are indicative of their implicit support in sustaining Russia’s economic robustness in the face of Western-imposed sanctions,” commented the publication.
The rise in profits for the European banks is partially ascribed to the restrictions that hamper their ability to repatriate funds from Russia, following the severe measures enforced by Moscow post the increased aggression against Ukraine, the FT points out.
FAQ
How much in taxes have Western banks paid to Russia in 2023?
Western banks have paid a total of 800 million euros in taxes to Russia in 2023, according to a Financial Times report.
What is the increase in tax payments by Western banks to Russia compared to previous years?
The tax payments in 2023 by Western banks are four times the amount paid before the full-scale invasion of Ukraine by Russia.
Which banks are included in this report?
The report includes seven European banks with substantial assets in Russia—Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo, and OTP—as well as U.S. lenders such as Citigroup and JPMorgan.
Why are Western banks unable to withdraw funds from Russia?
Western banks are facing restrictions imposed by Moscow, which hinder their ability to repatriate funds from Russia following the conflict with Ukraine.
How does this affect the Russian economy?
The taxes paid by these banks contribute to approximately 0.4% of Russia’s anticipated non-energy budget revenues for 2024 and help maintain financial stability in the face of sanctions.
Conclusion
The large tax contributions made by Western banking firms to the Russian budget in 2023 highlight the intricacies of international finance and sanctions. Despite a significant drop in profits following the outbreak of the war with Ukraine, the banking industry in Russia, including Western players, has shown remarkable resilience and profitability, largely due to their inability to withdraw funds following financial restrictions imposed by the Russian government. This situation has consequently led to an increased tax inflow for the Russian budget, demonstrating the complex economic consequences of ongoing geopolitical tensions.
Note: This article, crafted by TheUBJ, is based on information rewritten from various sources, including an AI-powered news feed technology. We do not claim ownership or authorship of the original news content. The original source can be referenced at https://kyivindependent.com/financial-times/.