Hungary to pull out of Russia-linked investment bank after US sanctions

Hungary is withdrawing its membership in a Russia-controlled investment bank a day after the United States issued sanctions against the Budapest-based financial institution.

The decision, announced on Thursday by Hungary's Ministry of Economic Development, came in response to the U.S. Treasury Department on Wednesday placing sanctions on the International Investment Bank , which relocated its headquarters to Hungary's capital from Moscow in 2019.

In a statement, the ministry said that “although the International Investment Bank has played an important development role in Central and Eastern Europe, the U.S. sanctions have rendered the bank’s operations meaningless.”

“Therefore, the government recalls the Hungarian government’s delegates to the International Investment Bank and withdraws from the international financial institution,” the statement said.

Hungary's stake in the bank, and the government's willingness to host its headquarters in Budapest, had led to frustration from U.S. officials in both the Biden and Trump administrations, who argued it could serve as a conduit for Russian espionage within the European Union and NATO.

In announcing the U.S. sanctions on Wednesday, a Treasury Department statement said the bank enables Russia "to increase its intelligence presence in Europe, opens the door for the Kremlin’s malign influence activities in Central Europe and the Western Balkans, and could serve as a mechanism for corruption and illicit finance, including sanctions violations.”

At a news briefing in Budapest following the sanctions announcement, the U.S. ambassador to Hungary, David Pressman, said Hungary’s government had ignored pleas from multiple U.S. administrations to withdraw its stake in the bank.

“The presence of this opaque Kremlin platform in the heart of Hungary threatens the security and sovereignty of the Hungarian people, their European neighbors and their NATO allies," Pressman said.

Three current or former executives of the bank — Russian citizens Nikolay Nikolayevich Kosov and Georgy Nugzarovich Potapov as well as Hungarian national Imre Laszloczki — were designated for sanctions as part of a broader package targeting the financial networks of two of Moscow’s wealthiest businessmen who are close allies of Russian President Vladimir Putin.

EU members Bulgaria, the Czech Republic, Slovakia and Romania were formerly members of the bank, which was founded in the Soviet Union in 1970. But all four countries said they would withdraw their membership after Russia launched its invasion of Ukraine, leaving Hungary as the only remaining EU member.

The International Investment Bank did not immediately reply to a request for comment.