The European Central Bank (ECB) confirmed on Monday the “bankruptcy or probable bankruptcy” of the European subsidiary of the Russian bank Sberbank, one of the largest in the country, due to “significant” deposit withdrawals in the face of the crisis in Ukraine and Western sanctions.
Austria-based Sberbank Europe AG and its subsidiaries in Croatia and Slovenia “had significant deposit outflows as a result of the impact of geopolitical tensions,” the ECB’s banking supervisory body said in a statement.
He warned that “in the near future, the bank may not be able to pay its debts or other liabilities as they come due”.
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The withdrawals caused a “deterioration of its liquidity” and “there are no measures available with a realistic chance” of restoring the institution’s cash flow.
Immediately, the Austrian regulator FMA imposed a “moratorium on the European subsidiary”, with which it will not be able to proceed to “any withdrawal, transfer or other transaction”, at least until March 2. Under European regulation, deposits from individuals are guaranteed up to 100,000 euros.
Russia’s two biggest banks, Sberbank and VTB Bank, have since Thursday been targeted by US sanctions aimed at limiting their international transactions due to Russia’s invasion of Ukraine.
Sanctions targeting the Russian banking system were reinforced on Saturday with the announcement of its exclusion from the international banking platform SWIFT.
Sberbank Europe AG is 100% owned by the Russian central bank. It also has subsidiaries in Bosnia-Herzegovina, the Czech Republic, Hungary and Serbia, which would be affected by bankruptcy but are not under the jurisdiction of the ECB.
The European supervisor specified that it has “coordinated with the national authorities” in those countries.
