Russia’s largest lender Sberbank said Wednesday it was leaving the European market after coming under pressure from Western sanctions leveled against the state bank in response to Moscow’s invasion of Ukraine.
“In the current environment, Sberbank has decided to withdraw from the European market,” the lender said in a statement carried by Russian news agencies.
The bank’s European subsidiaries were experiencing “abnormal cash outflows and threats to the safety of employees and branches,” the statement added.
Sberbank suffered financing issues following the announcement of tough European Union sanctions aimed at choking off Russian banks’ access to capital markets.
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Since Russian troops rolled into Ukraine last week to achieve Vladimir Putin’s mission of overthrowing the pro-Western government of President Volodymyr Zelensky, hundreds of civilians including children have been reported killed.
European banking regulators said Tuesday that the European subsidiary of Russia’s Sberbank would be wound up.
Sberbank’s Austria-based European arm, Sberbank Europe AG, would be allowed to enter “normal insolvency proceedings”, while branches in Croatia and Slovenia were sold to local banks, the European banking supervisory authority said.
On Monday, the European Central Bank had said that the European affiliate was “failing or likely to fail” after it “experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions”.
#UPDATE Russia's largest lender Sberbank is quitting the European market after coming under pressure from Western sanctions levelled against the state bank in response to Moscow's invasion of Ukraine.
The bank says its European subsidiaries are facing "abnormal cash outflows" pic.twitter.com/i84S9vL7bH
— AFP News Agency (@AFP) March 2, 2022
West bans 7 Russian banks
Western countries agreed to remove seven Russian banks from Swift, the financial-messaging infrastructure that serves as the bloodline for the global financial system. But they kept access for other Russian banks, including two key lenders, leaving open a conduit for payments to Russia for vital energy supplies.
Swift, a Belgian financial cooperative, was instructed to cut VTB, Russia’s second-largest bank by assets, VEB, another large player, and five smaller ones. Those have all been fully sanctioned by at least one Western country, meaning they were already cut from the global financial system to a large extent.
Read more: Why Russia’s invasion of Ukraine has spiked tensions globally?
Notably absent from the Swift ban were Sberbank and Gazprombank, both key banks in Russia. The decision to delist some banks but not all represented an EU compromise. A number of countries, including Germany, have argued it is important to make sure some banks remain on Swift to help Europe pay for essential energy imports from Russia and to allow some other vital transfers.
However, Sberbank has announced that it will leave Europe owing to the abnormal cash outflows and threats to the safety of employees and branches.
Courtesy: AFP with additional input by GVS