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RBI wants to buy Strabag stake linked to Oleg Deripaska

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US has pushed back as Deripaska is under sanctions

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Austria has urged RBI to drop the deal, sources say

(Recasts with CEO comment)

By Alexandra Schwarz-Goerlich and John O'Donnell

BERLIN, May 2 (Reuters) - Raiffeisen Bank International

(RBI) will drop plans to buy a stake in a construction

firm linked to a Russian tycoon if there is a risk of sanctions

breaches, the CEO of the biggest Western bank in Russia said on

Thursday.

RBI wants to buy a stake in Strabag linked to Oleg

Deripaska for 1.5 billion euros ($1.6 billion), a contested deal

that has renewed international pressure on the Austrian lender.

"If we cannot get comfortable with the sanction and

compliance risk, we must walk away from this deal," Chief

Executive Johann Strobl told analysts.

Austrian authorities have urged RBI to drop the deal fearing

a backlash from the United States, people familiar with the

matter told Reuters this week, a blow to RBI's plans to unlock

funds stranded in Russia.

In recent weeks, Austrian central bank officials have warned

RBI about the deal, cautioning it could backfire if the U.S.

penalises the bank, said one person with direct knowledge of

those discussions.

RBI is buying the stake in Vienna-based Strabag from a

company the construction group identified as earlier controlled

by Deripaska.

The move has 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.

"We will not proceed with the acquisition of the Strabag

shares ... if we believe there is a risk of sanctions or other

repercussions from any of the relevant authorities including the

U.S. Treasury and OFAC," Strobl told the analysts.

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.

(Writing by Andrey Sychev and John O'Donnell, Editing by Rachel

More and Mark Potter

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