The economic sanctions imposed on Russia by the European Union and its allies in the wake of the war in Ukraine have already brought the European subsidiary of Sberbank, one of Russia's leading banks, to the brink of bankruptcy.
Economic sanctions and mass withdrawals threaten Sberbank's European subsidiary
On Monday February 28, just a few days after the invasion of Ukraine by the Russian army and the imposition of economic sanctions by the European Union and its allies, the European subsidiary of the Russian bank Sberbank was declared " bankrupt or likely to go bankrupt ".
According to a press release from the ECB's banking supervisory body, "ECB assesses that Sberbank Europe AG and its subsidiaries in Croatia and Slovenia are failing or likely to fail", " in the near future, the bank may not be able to pay its debts or other liabilities as they fall due ".
This situation is due not only to the economic sanctions imposed by the European Union, the United States, Canada, the United Kingdom and Japan, but also to the massive withdrawals made by Russian customers from Sunday February 27.
" Sberbank Europe and its subsidiaries experienced significant deposit outflows due to the impact of geopolitical tensions on their reputation," explains the ECB, which " led to a deterioration in its liquidity position ".
At present, according to the European Central Bank, "there are no measures available that have a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union ".
European subsidiary may be placed in receivership
The Russian parent company owns 100% of Sberbank Europe AG, which is domiciled in Austria and has subsidiaries in Slovenia and Croatia. Other subsidiaries are located in Serbia, Hungary, Bosnia-Herzegovina and the Czech Republic. Also threatened with bankruptcy, they are located outside the European Banking Union and therefore outside the jurisdiction of the European Central Bank.
On Monday February 28, the Austrian Financial Market Authority (FMA) announced that it had imposed a moratorium on Sberbank's European subsidiary. As a result, until at least March 2, Sberbank Europe AG may not carry out any transactions, and depositors may only withdraw a maximum of 100 euros per day.
Although private individuals benefit from a deposit guarantee of up to 100,000 euros, as required by European regulations, they could well lose out on sums in excess of this ceiling. Creditors and shareholders are also likely to lose out if Sberbank Europe AG is put into resolution.
This procedure, managed by the Single Resolution Board (SRB), the European Banking Union's resolution authority, involves finding a buyer for those banking activities that remain viable, and putting the others into liquidation.
In addition, on Sunday February 27, the European Foreign Ministers, in agreement with the leaders of the G7 countries, decided to ban transactions by the Russian Central Bank, thus paralyzing more than half of its reserves placed in G7 banks. The aim is to prevent Russia from accessing these funds to finance the war in Ukraine.