(Reuters) -Austrian lender Raiffeisen Bank has abandoned a bid to buy a 1.5 billion euro ($1.6 billion) industrial stake of a Russian tycoon, following pressure from Washington to scrap the deal.
"In recent exchanges with the relevant authorities, RBI has been unable to obtain the required comfort in order to proceed with the proposed transaction," the bank said on Wednesday.
The collapse of the deal represents a fresh setback for the biggest Western bank in Russia.
Its plan to buy a stake in construction group Strabag linked to Oleg Deripaska had renewed international pressure on the Austrian lender.
The move had come under fire from the U.S. Treasury because Deripaska is sanctioned, exacerbating tensions between Washington and RBI, which is already under scrutiny from U.S. sanctions enforcement agency OFAC, sources told Reuters.
Other Austrian public officials had also privately cautioned the bank against the sale, believing it could be declared a breach of sanctions, people with direct knowledge had earlier told Reuters.
Two years after Russia's full-scale invasion of Ukraine, RBI's continued presence in Russia underlines the ties between Moscow and Vienna - whether via Russian gas pipelines or Vienna serving as a hub for cash from Russia and former Soviet states.
RBI's Russia business is a money spinner but has tarnished the group's image. Investors welcomed the prospect of the Strabag deal but the bank was forced to drop a planned bond sale when the U.S. objections emerged in a Reuters report.
($1 = 0.9308 euros)
(Reporting by Tristan Veyet in Gdansk; editing by Matthias Williams and Miranda Murray)
By Alexandra Schwarz-Goerlich and John O'Donnell
