The European Central Bank (ECB) concluded on Monday (28 February) that Sberbank Europe is failing or likely to fail, following considerable withdrawals from the accounts of Sberbank’s European subsidiary over the past week.
Shortly after the ECB’s announcement, the Single Resolution Board (SRB) – tasked with ensuring an orderly resolution of failing banks in the eurozone – confirmed the ECB’s assessment and placed a moratorium on Sberbank Europe.
This means that no transfers or significant cash withdrawals can be made from any Sberbank Europe account until at least Tuesday, 1 March at 23:59.
Sberbank Europe is fully owned by Sberbank of Russia, the country’s largest universal bank. It is based in Austria and has subsidiaries in Slovenia and Croatia that are also included in the moratorium.
Over the past week, many clients of Sberbank Europe have been withdrawing their money in response to the sanctioning of Sberbank of Russia, according to an ECB spokesperson.
The withdrawals happened even though Sberbank Europe was not itself targeted by last week’s sanctions.
“The bank clients seem to have anticipated further insecurity,” the ECB spokesperson told EURACTIV.
A spokesperson for the SRB told EURACTIV, “the bank is failing or likely to fail as a consequence of the negative impact of the current geopolitical situation, both on customer confidence, which led to rapid liquidity outflows, and on the ability of the Russian parent to support its European group.”
During the moratorium, bank clients can only withdraw very limited daily amounts of cash. Austrian customers, for example, cannot withdraw more than €100 per day.
Nevertheless, clients who did not hold high deposits at Sberbank Europe are unlikely to lose a lot of money, as retail depositors are protected up to €100,000 per depositor per bank in the EU.
What happens next?
Currently, the SRB is evaluating how to deal with Sberbank Europe after the moratorium ends on Wednesday (2 March) in a process known as the “public interest assessment”.
The options include a sale of parts or all of the bank, the transfer of parts of the bank to a temporary institution that can be publicly owned, a write-down of equity and debts, or a normal insolvency procedure, according to the SRB.
According to EURACTIV’s partner, the Croatian news site Jutarnji list, the SRB is currently trying to arrange a sale of Sberbank Europe’s Croatian subsidiary.
With only €13.6 billion in assets at the end of 2021, Sberbank Europe is a small actor in the EU’s banking sector. Its risks to contaminate other European banks is thus limited.
Nevertheless, the SRB remains cautions. “We see this as an idiosyncratic issue in this bank and would not speculate about any other entities,” a spokesperson told EURACTIV in emailed comments.
The likely failure of Sberbank Europe comes at a time of great turmoil for the Russian financial markets.
As a reaction to Western sanctions, specifically the freezing of half of the Russian central bank’s reserves, the Russian Ruble fell around 30% against the US dollar on Monday morning. The Russian stock market remained closed.
[Edited by Nathalie Weatherald]