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Sberbank’s liquidation in Central Europe, a collateral effect of war in Ukraine

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Central Europe – EU sanctions against Russia are already taking their toll: the Central European subsidiaries of Sberbank – Russia’s largest bank – are bankrupt and being forced into liquidation.

A non-essential bank for Austria’s economy and financial stability

The Single Resolution Board (SRB) announced on Tuesday, 1 March that it had ordered the liquidation of Sberbank Europe AG in Austria and its Hungarian subsidiary, Sberbank Magyarország Zrt.:

On 1 March 2022, the Single Resolution Board (the “SRB”) decided not to adopt a resolution scheme in respect of Sberbank Europe AG (…) established in Austria.

The SRB assessed that the cumulative conditions for resolution action set out in Article 18 of Regulation (EU) No 806/2014 (the “SRMR”) are not met. (…) On 27 February 2022, the SRB concluded that the Bank is failing or likely to fail (…) the SRB assessed that the Bank is failing or likely to fail owing to a deterioration of its
liquidity situation.
(…) The CRU concluded that no (…) measures could prevent the failure of the Bank within a reasonable timeframe [and] that, given the circumstances of the case, the characteristics of the Bank and its specific financial and economic situation,

resolution action with respect to the Bank is not necessary in the public interest [as] the functions performed by the Bank […] are not critical, since their discontinuance would lead neither to the disruption of services that are essential to the real economy of Austria nor to the disruption of financial stability in Austria or in other Member States.

Croatian, Slovenian, Hungarian, and Czech subsidiaries going bankrupt as well

This measure also concerns the bank’s Croatian subsidiary, Sberbank d.d., as well as its Slovenian one, Sberbank Banka d.d.

At the same time, the Hungarian National Bank (Magyar Nemzeti Bank, MNB) stated that Sberbank Magyarország Zrt. had entered a critical solvency situation due to the negative impact of the Russian-Ukrainian crisis on its Austrian parent company and its owner, Russia’s Sberbank. The MNB has therefore revoked Sberbank Magyarország Zrt.’s licence and started its liquidation.

The situation is much the same in Czechia, where the Czech National Bank has likewise taken steps as of Monday, 28 February to revoke Sberbank CZ.’s banking licence.

Russia’s Sberbank claims it will be able to reimburse depositors

For its part, Russia’s Sberbank has said that “given the current situation, it has been decided to leave the European market. (…)

The group’s subsidiaries were faced with an abnormal outflow of cash and threats to the safety of their employees and branches.

The Russian bank has said that it is “no longer able to provide liquidity to its European subsidiaries, but that its capital is sufficient to repay its depositors.

In the event of a total failure, the customers of the liquidated banks would be compensated for up to 100,000 euros by each county’s national deposit insurance funds.