Raiffeisen Bank International (RBI), an Austria-based leading European financial institution, faces a significant ethical and strategic dilemma due to its operations in Russia. Approximately 15% of the bank’s assets are tied to its Russian operations, making it one of the few Western banks with substantial exposure to the Russian market. Moreover, the Austrian lender generated more than half of its profits in Russia and Belarus in the first six months of the year (FT, June 30, 2024). The ongoing geopolitical tensions and the invasion of Ukraine have led many multinational companies to exit Russia, driven by both ethical considerations and pressure from international sanctions.

For Raiffeisen Bank, the decision to withdraw from the Russian market would align with the global move to isolate Russia economically. However, this would result in substantial financial losses, as the bank would need to write off a considerable portion of its assets and face long-term consequences on its profitability and market position. Moreover, exiting the Russian market could disrupt services for millions of Russian customers, many of whom are not directly involved in the conflict.

Conversely, continuing operations in Russia allows Raiffeisen to sustain its financial performance and fulfill its obligations to its Russian clients. However, this decision could be seen as supporting a regime under international sanctions, potentially harming the bank’s global reputation and leading to increased scrutiny from regulators and stakeholders in other markets.

How would you address this ethical dilemma? Would you prioritize financial stability and client commitments by staying in Russia, or would  you follow the lead of other multinational companies and exit the market? The most difficult decisions often are not between good and bad, but between bad and worse…

Case written by Agassy Manoukian, American University of Armenia