They were not long in coming, the consequences of sanctions against Russia. The European branch of Russia’s largest financial institution, Sberbank, is threatened with bankruptcy. At least that’s how the banking supervision of the European Central Bank (ECB) sees it. The regulator considers the survivability of the Russian bank’s European subsidiaries to be in serious jeopardy, with Sberbank and its two subsidiaries in Croatia and Slovenia “failing or likely to fail”. The ECB Banking Supervision uses this wording to identify institutions that it believes are no longer viable.
As a result, the EU’s Single Resolution Board (SRB), which deals with troubled European lenders, has suspended all payment, enforcement and termination rights for three departments until March 1. Thus, the subsidiaries of Sberbank are considered “frozen”. Sberbank Europe, based in Vienna, is a 100 percent subsidiary of the majority state-owned Sberbank in Moscow. According to the bank, it has 187 branches with 3,800 employees and around 773,000 customers in Central and Eastern Europe, including 65,000 customers in Germany and Austria.
In a statement, the company emphasized its cooperation with the supervisory authorities. “We are making every effort and fully supporting the authorities so that they can use their powers to master this unprecedented situation in the interests of customers,” says Sberbank Europe boss Sonja Sarközi. In a statement, she pointed out that several of the group’s banks had “recorded a significant outflow of customer deposits within a very short period of time”, which is why daily cash withdrawals had been restricted in some cases.
The Russian Sberbank is the first major victim of the tightened sanctions. Other Russian banks could soon follow. Russia’s economy is currently isolated and weakened by tough sanctions over the attack on Ukraine. In EU circles it is said that a large part of the business volume of Russian banks will be affected by the sanctions.
The most far-reaching reaction so far: On Saturday evening, the EU countries, the USA, Canada and Great Britain decided to block the international payment system Swift for numerous Russian banks. Japan also joined the move on Sunday. This means that some EU-listed financial institutions can no longer send or receive money abroad via Swift. Exclusion from this system is a heavy blow for Sberbank and many other Russian banks.
German savers are also affected by the impending bankruptcy
There has apparently been massive pressure from London in the past few days. According to British media, Prime Minister Boris Johnson’s government has urged the European Union to impose sanctions on the Russian bank as soon as possible. “We have to flatten Sberbank,” the news portal quoted as saying political a government insider.
The “unsolvable liquidity bottleneck” at Sberbank Europe also affects German savers. Since the institution has raised deposits through a branch in Germany, around 35,000 German accounts with balances of around 1.1 billion euros are affected. In the event of insolvency, the Austrian deposit insurance would be responsible for this, which had to step in with two bank insolvencies just two years ago. Deposits from private investors are legally protected in the EU up to an amount of EUR 100,000 per depositor and bank – including at the European Sberbank. This was confirmed by the German financial regulator Bafin. The institution would closely monitor “developments from a supervisory perspective” and be in “close contact” with other supervisory authorities.