Sberbank Europe falters as depositors flee

Sberbank Europea unit of Russian state lender Sber, faces the risk of imminent collapse after customers across central Europe rushed to withdraw their deposits, forcing local operations to agree with regulators to shut down to stop the run. Confidence in the bank was shaken by the Russian invasion of Ukraine and the imposition of Western sanctions against the Sber parent of Russiawhich is now excluded from the SWIFT international payment system.

the European Central Bank (BCE), the regulator for Sberbank Europe operations in Austriaas well as separate Slovenian and Croatian subsidiaries, imposed a moratorium on the bank’s branches on February 27warning that it was close to collapse: “Sberbank Europe AG and its subsidiaries have experienced significant deposit outflows due to the reputational impact of geopolitical tensions,” he said.

“This has caused its liquidity position to deteriorate,” said the ECB added. “There are no measures available with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”

Following the ECB lead, the units of the bank in Austria, Slovenia and Croatia were subject to a moratorium until the end of 1st of March by the respective central banks of their countries in order to limit withdrawals. of Sberbank operations in Hungarywhich is not under ECBwas also placed under a moratorium by the Hungarian central bank.

The Czech National Bank (CNB) even initiated steps to revoke the banking license of Sberbank CZ, due to the deterioration of the bank’s liquidity situation linked to the outflow of deposits after Russia invasion of Ukraineindicated the CNB on February 28. The CNB said it assumed that this solution would not affect the stability of the Czech financial sector.

Sberbank CZ closed on Friday after a run on deposits. “The liquidity crisis of Sberbank CZ was caused by external geopolitical developments. It is therefore an isolated and specific problem involving a bank which is not significant from the point of view of the national banking sector. The Czech banking sector thus remains one of the most robust and stable in Europe,” said CNB Governor Jiří Rusnok.

“The CNB has been intensively addressing the situation with Sberbank CZ from the very beginning and is doing everything possible to minimize the impacts of the bank’s problems on its customers,” he added.

The board of CNB recognized that the bankruptcy of Sberbank CZ could be avoided by using a different measure within a reasonable time. Deposits of Sberbank CZ customers are subject to legal insurance of up to € 100,000 per customer. 100% compensation is provided up to this limit.

“The Financial Markets Guarantee Scheme is ready to start paying compensation for deposits insured in accordance with the law up to €100,000 per client as soon as it receives the corresponding notification from the Czech National Bankcommented Renata Kadlecova, Director General of the Financial Market Guarantee System.

The bank said deposits from citizens and businesses are insured, as are deposits from municipalities and regions, but only if they are recipients of tax revenue and their tax revenue does not exceed the equivalent of 500,000 €. “I can assure depositors that the guarantee scheme has sufficient funds to satisfy all eligible claims for payment of deposit compensation,” she noted.

Sberbank Europe AG had total assets of 13.64 billion euros at the end of last year. He is present in AustriaCzechia, Serbia, Bosnia and Herzegovinaand Hungary. Sber also has two separate Croatian and Slovenian units.

The bank branches of bosnia two entities, the Federation and the Serbian Republicsaid the February 28 they took control of the two local subsidiaries of Sberbank EuropeSberbank BH Sarajevo and Sberbank Banja Luka, in order to preserve the stability of bosnia banking system and protect the bank’s depositors and creditors.

Sberbank Europe said in November that it had reached an agreement to sell its subsidiaries in Croatia, Slovenia, Hungary, Serbia and bosnia to a group including Serbia AIK Banka and Slovenia Gorenjska Bank. The Slovenian Gorenjska Banka announced the February 28 that it is not possible to proceed with the acquisition of the Slovenian subsidiary of the Russian company Sberbank after the latter kept its doors closed on Monday. On the other hand, AIK Banka has completed the acquisition of Sberbank Serbia, the two banks announced on Monday.

©2022 bne IntelliNews , source Magazine

Mary I. Bruner