European bank stocks continue to slide; Russian Sberbank leaves Europe

FRANKFURT/LONDON, March 2 (Reuters) – European banks traded lower on Wednesday after two days of steep losses to hit their lowest level in nearly 11 months as the crisis in Ukraine drags on and after the branch European Russian Sberbank was forced to close.

An index of major European banking stocks (.SX7P) fell 1.7% on Wednesday, after falling 5.6% on Tuesday and 4.5% on Monday. It hit its lowest level since April, down 27% from last month’s highs.

Wednesday’s exchanges come amid Russia showing no intention of stopping its onslaught, as US President Joe Biden warned Vladimir Putin that the Russian leader “has no idea what’s to come.” Russia calls its actions in Ukraine a “special operation”. Read more

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Among the worst-hit banking stocks so far this week is Austria’s Raiffeisen Bank International (RBIV.VI), which is also considering exiting Russia, two people with knowledge of the matter told Reuters, a decision which would make it the first European bank to do so since Moscow invaded Ukraine. Read more

Raiffeisen shares, which are half the value of a month ago, fell 5.1%.

Some officials are trying to reassure the markets. The capital position of Hungarian bank OTP, Central Europe’s largest independent lender, is excellent and the bank can withstand possible additional market shocks in Russia and Ukraine, the Hungarian central bank said in a response. via email to Reuters.

RUN ON DEPOSITS

Overnight, the European branch of Sberbank (SBER.MM), Russia’s largest lender, was shut down on orders from the European Central Bank, which warned it was at risk of bankruptcy due to a run on deposits after Russia invaded Ukraine, said the Austrian Financial Markets Authority. Read more

Sberbank, which reported record profits in 2021, said it was exiting the European market as its subsidiaries there faced large cash outflows and threats to the safety of employees and property. Read more

Sberbank operated in Austria, Croatia, Germany and Hungary, among other countries, and had European assets worth 13 billion euros ($14.41 billion) as of December 31, 2020.

German market regulator BaFin is closely monitoring the European branch of Russian bank VTB (VTBR.MM), which was no longer accepting new clients. The bank, headquartered in Frankfurt, had 8.1 billion euros in assets at the end of 2020.

On Tuesday, Russia said it was imposing temporary restrictions on foreigners seeking to exit Russian assets, as it tries to stem investor withdrawal driven by crippling Western sanctions imposed during the invasion of Ukraine. .

But investors continue to lose assets. Aviva’s fund management unit (AV.L) will divest its small exposure to Russia “as soon as possible”, chief executive Amanda Blanc said on Wednesday.

Financial companies are scrambling to deal with the situation.

Dubai’s Mashreqbank (MASB.DU) has stopped lending to Russian banks and is reviewing its current exposure to the country, two sources familiar with the matter told Reuters. Read more

The move is one of the first reported cases of a bank in the Middle East ending its ties with Russia and underscores growing global nervousness about falling foul of Western sanctions.

France’s BNP Paribas (BNPP.PA) said it was trying to maintain business as much as possible at its Ukrainian branch Ukrsibbank, which has nearly 5,000 employees.

A working group from Germany’s Commerzbank, which has a branch in Russia, meets several times a day, a board member said.

Aki Hussain, CEO of Hiscox (HSX.L), said insurer Lloyd’s of London covered international businesses in Ukraine.

“We’ve been insuring these offices and some of the people there and have been working closely with our clients for eight weeks and effectively – to the extent they want – helping them out of the country and evacuating their staff. “

($1 = 0.9022 euros)

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Additional reporting by Gergely Szakacs, Zuzanna Szymanska, Saeed Azhar and Yousef Saba Editing by Paul Carrel and Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

Mary I. Bruner