Western banks paid 4 times more taxes to Russia in 2023 than before the war

Lloyd Linn, journalist.

In 2023, the largest European banks that continue to operate in Russia paid over 800 million euros in taxes to the Russian treasury, which is four times more than in the period before the start of the special military operation in Ukraine. This is stated in the Financial Times article published on April 29 of this year.

The seven top banks by assets reported a combined profit of more than €3 billion in 2023

The largest western banks that remain in Russia paid the Kremlin more than €800 million in taxes last year (compared to €200 million in 2021), a fourfold increase on prewar levels, despite promises to minimize their Russian exposure after the full-scale invasion of Ukraine. The seven top European banks by assets in Russia — Raiffeisen Bank International, UniCredit, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP — reported a combined profit of more than €3 billion in 2023.

As we can see, despite the Russian-Ukrainian full-scale war and isolation from the global economy since heavy Western sanction, the Russian banking industry is once again thriving. For example, Russia’s state-owned Sberbank reported a record annual profit of €15.2 billion in 2023, a more than five-fold increase compared to 2022.

Foreign companies are still remaining to maintain financial stability

The taxes paid by the banks are equivalent to about 0.4% of all expected non-energy Russian budget revenues for 2024, the FT reported. “[This is] an example of how foreign companies remaining in the country help the Kremlin maintain financial stability despite Western sanctions,” the media outlet wrote.

The growth of European banks’ profits is partly explained by the funds they cannot withdraw from Russia due to restrictions imposed by Moscow after the full-scale invasion of Ukraine, according to the FT. Such tax payments by European banks in Russia are seen as an example of how foreign companies remaining in the country help it maintain financial stability in the face of Western sanctions. The newspaper notes that foreign creditors not only benefited from rising interest rates, but also from international sanctions against Russian banks. These measures led to the fact that competitors were excluded from international payment systems, which increased the attractiveness of Western banks for clients in Russia.