With sanctions, Russian Sberbank faces “failure” in Europe

Sberbank and Russian bank branches in southeastern Europe face closures or takeovers following international sanctions imposed on Moscow over its invasion of Ukraine

BELGRADE, Serbia – Faced with a rush to cash out, Sberbank and the Russian bank’s subsidiaries in southeastern and central Europe are facing closures or takeovers as a result of sanctions international sanctions imposed on Moscow for its invasion of Ukraine.

The European Central Bank said on Monday that Vienna-based Sberbank Europe AG and its branches in Slovenia and Croatia are failing or at risk of failing after “experienced large deposit outflows” due to the impact of the conflict on their reputation.

“The bank will likely be unable to pay its debts or other liabilities as they come due,” the ECB said.

Sberbank and VTB banks are the two largest public banks in Russia and hold about half of the assets of the Russian banking system. They were targeted last week by tough US sanctions aimed at limiting their international activities and over the weekend they were barred from the SWIFT international payment system.

In Slovenia and Croatia, Sberbank temporarily closed branches or restricted cash withdrawals following a rush by customers last week.

In Croatia, bank customers will be allowed to withdraw a maximum of around 1,000 euros per day for the next two days. In Slovenia, branches will be closed for the next two days and then withdrawals will be limited to 400 euros per day.

Sberbank Europe AG also has subsidiaries in Bosnia, the Czech Republic, Hungary and Serbia, which are outside the jurisdiction of the European Central Bank.

Personal money is protected up to €100,000 per depositor in the European Union, including Slovenia, Croatia, Czech Republic and Hungary. In Serbia and Bosnia, local banking regulators guarantee up to €50,000 and €25,000 respectively.

The Czech central bank said on Monday it was taking steps to revoke the banking license of Sberbank CZ, the Czech subsidiary.

The bank said the move was the result of “the bank’s liquidity situation against the backdrop of a large outflow of deposits after the escalation of the Russia-Ukraine conflict and Russia’s attack on Ukraine”.

Czech branches of Sberbank Europe were closed on Monday, with the bank citing a large withdrawal of customer deposits in a short time.

Hungary’s central bank has ordered two public holidays at Hungarian branches of Russia’s Sberbank, according to an announcement by the Hungarian National Bank, or MNB, on Monday.

During this period, customers will be able to use their credit cards but will not be able to receive funds into their account, the national bank wrote.

The central bank is examining the situation of the credit institution following the announcement of the possible insolvency of Sberbank. According to the MNB, the situation has no effect on other members of the Hungarian system of financial institutions.

In Serbia, which has not joined Western sanctions against its ally Russia, the central bank said it was monitoring Sberbank’s liquidity and promised to intervene if something went wrong. In Bosnia, the central bank branch said it was taking over the Sberbank branch to protect the interests of its worried customers.

———

Associated Press writers Karel Janicek, Justin Spike and Sabina Niksic contributed.

About Eleanor Blackburn

Check Also

Inflation has not peaked yet

ZAGREB, May 6 (2022) – Addressing a traditional conference of regional central bank governors in …