(Bloomberg) — Europe froze Sberbank of Russia PJSC’s main businesses in the bloc after regulators determined they were likely to fail in the wake of sanctions imposed in response to Russia’s invasion of Ukraine.
Most Read from Bloomberg
The Single Resolution Board, which handles European lenders that run into trouble, suspended payments, enforcement and termination rights to three Sberbank divisions until the end of March 1. That came after the European Central Bank determined that Austria-based Sberbank Europe AG and its subsidiaries in Croatia and Slovenia probably won’t be able to pay their debts or other liabilities as they fall due.
Sberbank Europe and its subsidiaries “experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions,” the ECB said in a statement. “This led to a deterioration of its liquidity position. And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”
The U.S. said last week it was sanctioning five of Russia’s largest banks, including Sberbank and VTB Bank PJSC. Sberbank also is among the banks that will be restricted from access to the SWIFT transaction messaging system under penalties announced by the U.S., Canada and Europe on Saturday.
Sberbank Europe has 13.6 billion euros ($15.2 billion) of assets, and a combined 6.8 billion in the banking union entities in Austria, Croatia and Slovenia, according to the SRB.
Sberbank’s European subsidiary said it was cooperating with regulators and it was part of deposit insurance plans in all countries of operation.
“We are making every effort, and fully support authorities in the use of their powers so that they can master this unprecedented situation,” Sonja Sarkoezi, the chief executive officer of Sberbank Europe, said in a statement.
Depositors will be able to withdraw a daily amount determined by authorities in the three European countries. National authorities announced detailed limits, with Austrian regulators imposing a 100 euro ($111) daily withdrawal limit and halting most other transactions.
The share of deposits covered by insurance plans wasn’t immediately clear, based on Sberbank’s statement or its annual report for 2020.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.
