The European subsidiary of the Russian bank Sberbank, among the largest in the country, is in turmoil. The European Central Bank (ECB) noted, on Monday 28 February, the “bankruptcy or probable bankruptcy” of Sberbank Europe AG, weakened by the many consequences of the conflict in Ukraine.
Sberbank Europe AG, domiciled in Austria, and its subsidiaries in Croatia and Slovenia have “experienced significant deposit outflows due to the impact of geopolitical tensions on their reputation”explains the banking supervisory body of the ECB in a press release, estimating that, “in the near future, the bank may not be able to pay its debts or other commitments as they come due”.
The withdrawals resulted in a “deterioration of liquidity” of the bank and “there is no way available” which confers a “realistic chance” to replenish the coffers of the institution, continues the ECB.
A moratorium on transactions until March 2
As a result, the Austrian Financial Markets Authority imposed a “moratorium” on the European subsidiary, which means that it cannot carry out “no withdrawals, transfers or other transactions” at least until March 2. Under European regulations, retail deposits are guaranteed up to €100,000.
The two largest Russian banks, Sberbank and VTB Bank, have been targeted in particular since Thursday by heavy American sanctions, aimed at largely limiting their international transactions. The sanctions targeting the Russian banking system have since been reinforced with, in particular, the announcement on Saturday of the exclusion of certain institutes from the Swift system.
Sberbank Europe AG is 100% owned by the bank’s Russian parent company. It also has subsidiaries in Bosnia and Herzegovina, the Czech Republic, Hungary and Serbia, which would be affected by bankruptcy but do not come under the jurisdiction of the ECB. The European supervisor specifies that he has “coordinated with national authorities” in these countries.
