Raiffeisen-Strabag deal may be coming closer to fruition - RBI's 15-Jun-24 AT1 call may be possible, after all. (RBI AV).

• RBI is selling its Russian business to Oleg Deripaska (who is subject to US sanctions) in exchange for his shares in Austrian construction firm, Strabag. The deal, worth c.EUR1.5bn, was first announced in Dec-23.

• US Treasury officials met the bank in early-March, reportedly as part of normal monitoring but the equity and credit prices indicated this was far from normal. Subsequently, RBI tried to issue AT1 debt on 20-Mar but views from the US ended with this being cancelled same day. RBI has an AT1 call in Jun (RBIAV 4.5 Perp).

• RBI has stuck to the line that the deal had been properly structured and there are now reports that the stake in Strabag has been sold to a third party (Iliadis JSC) which is not sanctioned. The US authorities will clearly see through this transaction so could still block the deal but could also take the view that the further isolation of the Russian banking system, which this deal would achieve, is ultimately a goal worth pursuing.

• We’d expect that hope to be a spread positive for RBI today but are very aware this is an unpredictable and politicised situation.