Feb 20 (Reuters) - Raiffeisen Bank International's (RBIV.VI) shares suffered their worst daily drop since the onset of the Ukraine war on Monday, after news that the Austrian lender has drawn the attention of U.S. sanctions officials over its Russian business.
Shares in the bank were down 7.6% at 1130 GMT after it told Reuters on Friday it had received a request for information from the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) to "clarify payments business and related processes maintained by RBI in light of the recent developments related to Russia and Ukraine".
Raiffeisen is deeply embedded in the Russian financial system and is one of the only two foreign banks on the Russian central bank's list of 13 "systemically important credit institutions", underscoring its importance to Russia's economy, which is grappling with sweeping Western sanctions.
The bank told Reuters in a statement on Friday that it is cooperating fully with OFAC and that it understood the request was not triggered by a specific transaction or business. It said it had processes in place to ensure compliance with sanctions.
The U.S. Treasury can penalise firms that break sanctions, including freezing U.S. assets and excluding banks from accessing U.S. dollars, something that is critical for their involvement in international trade and finance.
BNP Paribas Exane analysts downgraded their Raiffeisen rating from outperform to neutral over the potential risks.
However, Erste Group analysts reiterated their positive stance on Raiffeisen's stock, arguing that OFAC requests are common and may not necessarily lead to any sanctions.
Foreign companies have rushed to cut their exposure to Russia amid a string of sanctions from Western countries aimed at derailing Moscow's war efforts in Ukraine.
These include France's Societe Generale (SOGN.PA), which last year sold its local operations to Russian businessman Vladimir Potanin.
President Vladimir Putin has moved to make it harder for foreign banks to pull out of Russia, requiring that any stake sales be approved by him first.
"No one wants to be the last Western bank operating in Russia, that is not a great look," said Daniel Tannebaum, partner within consultancy Oliver Wyman's Risk and Public Policy Practice and a former compliance officer at the U.S. Treasury.
"I do see a lot of people looking around to see who's left to make sure they are not last."
UniCredit (CRDI.MI), which also maintains links with Russia, has not received a similar request from OFAC, a spokesperson for the Italian bank told Reuters on Monday.
Earlier in February, Raiffeisen reported it earned more than half of its 2022 profit from Russia, a market it is considering exiting after the country's invasion of neighbouring Ukraine.
Raiffeisen's shares have dropped 34% in value since before the invasion of Ukraine, compared with a 7% gain in the broader European banking stocks index (.SX7P) over the same period.
The price of the bank's bonds also dropped on Monday. Its 500 million euros 1.375% subordinated notes due in June 2033 were down by more than 2 euro cents, trading at 73/75 cents.