European Union officials have agreed to withdraw seven Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the Belgium-based global financial messaging service, Bloomberg reported Tuesday, citing unnamed sources.
The banks are VTB Bank, Bank Otkritie, Novikombank, Sovcombank, Promsvyazbank, Bank Rossiya and VEB, the sources told the press service. The United States had already imposed blocking sanctions against the first four of these banks. The move ordered assets linked to VTB, for example, which are held in US financial institutions, to be instantly frozen and inaccessible to the Kremlin starting last Thursday, in response to Russia’s invasion of Ukraine.
Russia’s biggest lender, Sberbank, as well as Gazprombank, 46% owned by energy conglomerate Gazprom, would remain connected to SWIFT – another indicator that European and North American powers have sought to limit the impact of sanctions on the EU. global oil and gas supply. And, by the way, perhaps, about ordinary Russians. Sberbank has more than 100 million retail banking customers and holds about half of Russia’s deposits.
Leaving the European market
Although spared, Sberbank is clearly taking a hit. The shares of the Russian bank were trades at 1 cent in the London market on Wednesday – a drop of 99.9% since the start of the year.
The bank said in a statement on Wednesday that it would pull out of the European market because its subsidiaries there “face an exceptional outflow of funds and a number of security issues relating to its employees and offices”. The Russian central bank’s ban on transferring funds abroad means Sberbank “cannot provide liquidity” to its European operations, the bank said.
Sberbank Europe, the bank’s Austrian subsidiary, will be liquidated under local insolvency proceedings, the Single Resolution Board (SRB) said on Tuesday.
“We have been monitoring the situation for some time,” SRB chairwoman Elke König told the FinancialTimes. “But the failure of this institution came at lightning speed.”
Kwherenig said she was confident the unit had enough assets to repay its billion euros in deposits, but it was unclear whether they would cover all debts.
Croatian and Slovenian units of Sberbank, meanwhile, were sold for a “small positive sum” to Hrvatska Poštanska Banka and Nova Ljubljanska Banka, respectively, the SRB said. The Russian bank’s Czech unit has been bankrupted and its operations in Hungary have been frozen pending a final decision, Konig said.
A group of banks led by Slovenian AIK Banka agreed last year to buy the Croatian, Slovenian and Hungarian units of Sberbank, as well as its operations in Serbia and Bosnia. König said the deal was “already on hold” and would not have been finalized despite current sanctions, according to the Financial Times.
Tuesday’s move is only the second time the SRB has taken control of a bank since 2015. The agency orchestrated the sale of Spain’s Banco Popular to Santander in 2017 for €1.
The SWIFT restrictions, meanwhile, would go into effect 10 days after they were adopted, Bloomberg’s sources said, noting that an EU member was asking for a 30-day delay.
“We will disconnect them once we receive the legal instruction to do so,” SWIFT told the news service in a statement Tuesday.
Poland and other EU countries have pushed for more banks to be included in the sanctions, Bloomberg reported.