Status: 02/28/2022 4:34 p.m
The harsh international financial sanctions are threatening the existence of the first Russian banks. Sberbank Europe is apparently on the verge of collapse. That would also have consequences for German savers.
The offer sounded tempting: With up to 1.5 percent interest on fixed deposits, Sberbank Direct in Germany attracted customers who want to park their money for the long term. This set the bank apart from many other financial institutions, most of which no longer pay interest. Thousands of Germans have therefore stashed their money at Sberbank.
ECB banking supervision warns of default
But it is doubtful whether the money is still safe there in the long term. The European banking supervisors warn of a possible bankruptcy of the European subsidiaries of Sberbank. Sberbank Europe, headquartered in Vienna, and its subsidiaries in Croatia and Slovenia could “fail or probably fail,” warned the banking regulator of the European Central Bank (ECB) on Monday night.
Supervisors have identified “significant outflows of deposits” at Sberbank Europe and its subsidiaries. “As a result, their liquidity situation has deteriorated. There are no measures available with realistic prospects of restoring this position at group level and at the level of individual subsidiaries in the banking union,” the ECB judged.
Payment moratorium until March 1st
The Austrian Financial Market Authority has therefore imposed a payment moratorium up to and including March 1 against the Sberbank European subsidiary. It prohibits her from making “withdrawals, transfers or other transactions”. The only exception: depositors are allowed to withdraw a maximum of 100 euros per day “to secure the most important daily needs”.
In the European headquarters in Vienna one shows itself to be insightful. “We are making every effort and fully support the authorities so that they can use their powers to master this unprecedented situation in the interests of customers,” said Sberbank Europe boss Sonja Sarközi in a statement.
The situation at Sberbank’s Czech subsidiary is even more dramatic. Numerous customers withdrew their funds there in protest against the Russian attack on Ukraine. The National Bank has taken steps to revoke the banking license of the Sberbank subsidiary in the Czech Republic. A spokeswoman said the branch was prohibited from granting new loans and accepting new deposits by temporary injunction.
Austrian security fund would have to step in in the event of bankruptcy
If the Sberbank subsidiaries went bankrupt, the Austrian security fund would have to step in. Deposits from private investors are protected by law in the European Union up to an amount of EUR 100,000 per depositor and bank. The ECB emphasized that this protection is also granted by the deposit guarantee systems in Austria for the bank’s branches in Germany, as well as in Croatia and Slovenia.
The German financial regulator Bafin confirmed that deposits by German depositors at Sberbank Direct, based in Frankfurt, are protected by the Austrian deposit insurance. “In the event of compensation, the Austrian compensation institution must immediately examine the compensation claims of the depositors and take the appropriate compensation measures,” the authority said. “In the event of compensation, the German compensation institution is responsible for making the payments and usually has to meet the depositor’s claims within seven working days of determining the compensation event.”
Until recently, it was unclear whether the deposit guarantee systems also apply in the event of bankruptcies as a result of sanctions. It also cannot be ruled out that the Russian government will use funds deposited with its banks, such as Sberbank, to finance the war against Ukraine.
Largest financial institution in Russia
Sberbank Europe is a 100 percent subsidiary of the majority state-owned Sberbank in Moscow. According to its own information, Sberbank Europe has around 773,000 customers in Central and Eastern Europe, 65,000 of them in Germany and Austria. Sberbank is the largest financial institution in Russia. Every second Russian has an account there.
The exclusion of Sberbank from the SWIFT system is already having an effect. According to media reports, many Russians were no longer able to withdraw money from ATMs. A Muscovite told the dpa that it was only after a long search in the city center that he was able to find a Sberbank machine that spat out around 80 euros.