JOIN USEuropean subsidiary of Russia's Sberbank 'failing or likely to fail': ECB
The European subsidiary of Russia's state-owned Sberbank is facing bankruptcy, the European Central Bank said on Monday, in the wake of sanctions aimed at punishing Moscow for its invasion of Ukraine.
Sberbank is one of Russia's largest banks.
Austrian bank Sberbank Europe AG and its subsidiaries in Croatia and Slovenia have "experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions," the ECB said.
As a result, the bank is "likely to be unable to pay its debts or other liabilities as they fall due", the ECB said.
"The European Central Bank (ECB) has assessed that Sberbank Europe AG and its two subsidiaries in the banking union, Sberbank d.d. in Croatia and Sberbank banka d.d. in Slovenia, are failing or likely to fail owing to a deterioration of their liquidity situation," the ECB said.
The two largest Russian banks, Sberbank and VTB, were targeted last Thursday by tough US sanctions aimed at limiting their ability to conduct business internationally.
The sanctions were stepped up over the weekend with the announcement that selected banks would be expelled from the international SWIFT payment system.
As customers rushed to withdraw their money from Sberbank Europe AG, "this led to a deterioration of its liquidity position", the ECB said.
"There are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union."
Austria's financial market regulator FMA has imposed a "moratorium" on Sberbank Europe AG, blocking it from carrying out any "withdrawal, transfer or other transaction" until at least March 2.
Under EU legislation, retail depositors are protected up to 100,000 euros ($112,000) per depositor per bank.
The CEO of Sberbank Europe AG, Sonja Sarkozi, said she was "in close contact with the competent regulatory authorities" to seek a solution to "an unprecedented situation".
The bank's Slovenian subsidiary said it had "recorded a substantial outflow of funds in a very short space of time" and had "decided to keep its agencies shut for the next two days".
Withdrawals and payments were being limited to 400 euros per day, it added.
The Czech National Bank said it was revoking the banking licence of Sberbank CZ, a.s. following "a deterioration of the bank's liquidity situation in the context of a significant outflow of deposits".
"In this context, the CNB has issued a preliminary measure preventing the bank from disposing of assets and liabilities, including the provision of new loans and accepting deposits," it added in a statement.
Sberbank Europe AG is 100-percent owned by the bank's Russian parent company, which has 800,000 customers, employs 3,900 people and has assets worth 13 billion euros.
Sberbank Europe AG also has subsidiaries in Bosnia and Herzegovina, the Czech Republic, Hungary and Serbia, which do not come under the jurisdiction of the ECB.
The ECB said it has "coordinated with national competent authorities" in those countries.
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