The European Central Bank (ECB) has ordered for closure of the bank’s European business after it has warned of a potential failure due to run on deposits
Sberbank office in Khabarovsk. (Credit: КонстантинЕвстегнеев1996/Wikipedia)
Russia’s state-owned Sberbank is reportedly exiting from almost all European markets, due to large-scale cash outflows, and threats after sanctions against Russia’s invasion of Ukraine.
The move follows the European Central Bank (ECB)’s order to close the bank’s European business after it has warned of a potential failure due to run on deposits, reported Reuters.
In its annual reports statement, Sberbank announced that it cannot supply liquidity to European subsidiaries, following an order from Russia’s central bank.
The bank said that it has adequate capital and assets to pay all its depositors, and the Russian central bank aims to preserve foreign currency
Russian Central Bank Governor Elvira Nabiullina, in a video statement, said: “Russia’s economy had come up against an extreme situation, something she said they had all hoped would not happen. The bank was doing everything possible to help Russia’s financial system and central bank cope with any shocks.”
According to Reuters, Sberbank had assets worth €13bn in Europe as of 31 December 2020, with operations in Austria, Croatia, Germany and Hungary among other countries.
Austria’s Financial Market Authority imposed a moratorium on Sberbank Europe, and Deutsche Boerse halted trading of several securities from Russian issuers.
The bank’s European subsidiaries faced a liquidity crisis after sanctions, which resulted in the bank losing control over its operations, reported Reuters.
After Russia started invading Ukraine, the US, the UK, Canada, and Europe have imposed sanctions on Russian banks, and removed them from the SWIFT payments system.
US-based payment card companies Visa, Mastercard, and American Express (Amex) have blocked several Russian financial institutions from their network.