Sberbank, which is the largest Russian lender, confirmed its decision to withdraw from the European markets on Wednesday due to the mounting pressure on its operations from western sanctions.
The Russian bank had extended operations in Europe with subsidiaries and branches in Germany, Austria, Croatia and Hungary, among others. Following the sanctions on Russia, the bank’s European subsidiaries are facing an exceptional outflow of cash.
Also, the Russian parent bank could no longer supply liquidity to the European subsidiaries due to a directive issued by the Central Bank of Russia. However, it confirmed that it has sufficient capital to pay all the depositors.
In addition, the bank said that threats had been made to the safety of its employees and branches.
The Austrian subsidiary would be allowed to enter into the normal insolvency procedures, whereas the branches in Croatia and Slovenia were sold to local banks, the European banking regulators said. The branches in Croatia and Slovenia will be operational as normal again from Wednesday.
A Major Lender in Russia
Sberbank held around €13 billion in European assets by the end of 2020. Furthermore, it reported a record annual net profit of 1.25 trillion rubles in 2021 after an increase of 64 percent. Despite the booming business, the bank has become a prime target of the western sanctions as it helped finance several Russian companies.
The United States and the United Kingdom, have both slapped sanctions on Sberbank after the initiation of the Russian invasion of Ukraine. The British government even justified its move citing Kremline’s controlling share on the bank.
Meanwhile, the Austrian financial market regulator confirmed that all deposits of Sberbank Europe AG’s customers are protected up to €100,000. The deposits in the Croatian and Slovakian branches are covered without any limits.
