The International Investment Bank (IIB), which in the West is called the Russian “spy bank”, after the outbreak of a full-scale war in Ukraine and the imposition of sanctions against Russia, faced the threat of ruin. From the bank, whose headquarters is in Budapest, shareholders began to leave – this was announced by the Czech Republic, Slovakia, Romania and Bulgaria.
The agreement on the formation of the International Investment Bank was concluded in 1970. A document signed by the USSR, East Germany, Bulgaria, Hungary, Mongolia, Poland, Romania and Czechoslovakia. In 1971, the agreement was registered by the UN Secretariat. The purpose of the bank’s work was to promote economic development and cooperation of the member countries within the framework of the Council for Mutual Economic Assistance.
After the collapse of the USSR and the socialist bloc, the GDR, Poland and Hungary left the bank. Then, according to Balkan Insight, the bank “fell into hibernation” for two decades. In the 2010s, he resumed active work. In 2015, Hungary renewed its membership in the IIB, and a few years later the bank moved its headquarters from Bratislava to Budapest.
This event did not go unnoticed by the press, as the Hungarian authorities endowed the bank and its employees with unprecedented privileges, which caused serious concern in the international community.
We are talking about the Hungarian law, which, among other things, stated that neither the bank nor its activities are subject to financial or regulatory supervision. This law also gave bank employees diplomatic immunity and allowed the IIB to “establish any rules necessary for the conduct of its activities.” How explained European Council on Foreign Relations, this also meant that representatives of the Hungarian authorities were not allowed to enter the headquarters of the bank until it renounced its status. In addition, the law provided for numerous benefits for the management of the IIB, including full tax exemption.
However, the key feature of the law, due to which the member of the Hungarian Parliament Zita Gurmaj called bank “Putin’s Trojan horse”, was that the Hungarian authorities undertook to facilitate the entry, residence and freedom of movement of all employees and guests of the bank (the number of which was not limited), to the extent that the responsible authorities were deprived of the ability to make decisions on relevant requests, and were required to simply provide all the necessary documents. Hungarian newspaper Népszava wrotethat the move of the headquarters to Budapest was due to the fact that the Slovak authorities did not agree to give the bank such privileges and guarantees.
The fact that the bank was in a difficult financial situation became known in the winter of 2023. February 21 press service of the bank published a statement saying that he had been hacked a few days earlier. The media wrote that hackers gained access to internal correspondence of employees, documentation and other confidential information.
Hungarian journal HVG with reference to IIB documents informedthat in mid-December 2022, a senior bank official warned in a letter to management that the bank could become insolvent. The Belgian company Euroclear, one of the largest depositories of the European Union, froze his assets. How writes Euroactiv, the relevant decision was made by the Belgian Ministry of Finance.
In another document, which the journalists got acquainted with, it was said that the Minister of Economic Development of Hungary, Marton Nagy, representing Hungary on the board of the IIB, in the fall of 2022 tried to convince the Minister of Finance of Belgium, Vincent Van Petegem, to unfreeze the bank’s funds, but the corresponding request was rejected due to the connections of the leadership bank with the Russian authorities.
The IIB calls the leaked documents “fake”, but the problems the bank has faced due to the war in Ukraine are obvious. After the departure of all European shareholders, with the exception of Hungary, he risks falling under direct EU sanctions. As of the end of January 2023, Russia controls more than 45% of the bank’s shares, Hungary – about 25%, Bulgaria – about 14.5%, Romania – almost 9%, the rest falls on Cuba, Mongolia and Vietnam. The Czech Republic and Slovakia have already stopped participating in it, during 2023 Bulgaria and Romania intend to do so. As a result, Russia’s share may exceed 50% – and then the IIB will be officially qualified by the EU authorities as a Russian bank subject to sanctions.
January 30 in Budapest took place meeting of the Board of Governors of the International Investment Bank, following which an agreement was signed providing for a phased reduction in Russia’s share. But experts are not sure that the bank will be able to reduce it sufficiently to avoid sanctions. Balkan Insight Edition writesthat the situation could be influenced by Serbia, which in 2021 signed a memorandum of accession to the IIB, but information that it bought a stake in the bank has not yet appeared.
A source close to the Serbian government told Balkan Insight that Belgrade is slow to join the IIB as Serbia seeks to join the European Union and tries to avoid possible conflicts with European countries. Researcher at the German Council on Foreign Relations (DGAP) Andras Rach believes that Serbia could not have saved the IIB anyway. “It does not have the money to buy enough shares, and as a non-EU country, it will not strengthen the bank’s position in the EU,” the expert said.
Balkan Insight suggests that the solution could be to increase the share of Hungary, but she also does not have much money. Gergely Gouyash, head of Hungarian Prime Minister Viktor Orban’s office, speaking to reporters on February 25 declaredthat the bank is “in an exceptionally difficult position” and does not know if it can be saved. Nevertheless, as journalists write, the Hungarian authorities are making great efforts to ensure that Russia’s share in the bank remains below 50% and the bank avoids direct EU sanctions.
