The Russian financial institutions could become one of the main targets for EU and US sanctions over the escalation in Ukraine.
(Photo: Reuters)
Frankfurt The Russian attack on Ukraine is also putting European financial regulators on alert. Authorities have stepped up surveillance of subsidiaries of major Russian banks in the EU, several people familiar with the matter told Handelsblatt. The most important concern of the financial regulator is to prevent the bank’s subsidiaries from transferring funds to Russia.
The European subsidiary of VTB Bank, based in Frankfurt, and Sberbank Europe AG, based in Vienna, are among those affected by the tightened control measures. The latter is controlled primarily by the ECB, the VTB Bank Europe by the German financial regulator Bafin.
Neither the Bafin nor the ECB wanted to comment on the intensified monitoring of the Russian bank subsidiaries. The Bafin merely stated that it was monitoring current developments between Russia and Ukraine and was “in close contact with the supervised institutions about potential risks that could arise from an escalation of the conflict.”
A spokeswoman for ECB Banking Supervision said her agency was “closely monitoring the impact of the Russian invasion of Ukraine on banks in the EU”. The European subsidiary of Sberbank did not want to comment on the tightened controls, and VTB initially did not respond to a request.
Top jobs of the day
Find the best jobs now and
be notified by email.
VTB and Sberbank continue to collect deposits
Both institutes are members of the German Private Banking Association BdB and also collect deposits from private customers in the Federal Republic. The VTB direct bank is currently attracting private investors with annual interest payments of up to 0.65 percent on fixed-term deposit accounts. Sberbank Direct, which belongs to the Austrian Sberbank Europe, even offers up to 1.5 percent.
The institute continues its business as usual and continues to offer its customers all products and services, explained Sberbank Direct. All customers would have full access to their accounts.
“The new US sanctions currently in force against some Russian banks, including Sberbank and its subsidiary banks, only affect US dollar transactions and therefore have no effect on our customers in Germany,” the institute said.
In principle, all deposits at Sberbank Direct are also protected by the Austrian deposit protection fund up to an amount of EUR 100,000 per customer.
The VTB direct bank stated on its website that money is as safe with it “as with any other bank based in Germany”. In addition, deposits are secured up to at least EUR 750,000 per customer through membership in the deposit protection fund of German banks.
Bafin has installed special representatives at VTB
The Bafin had already taken on the VTB Europa subsidiary before the Russian invasion of Ukraine. In October 2021, the authority asked the institute to improve its internal systems “to prevent money laundering and terrorist financing”. In addition, Bafin appointed a special representative at the institute to monitor the implementation of appropriate internal security measures.
After the escalation of the situation in Ukraine, the ECB is not only keeping a close eye on the European subsidiary of Sberbank, but also on a handful of major European banks with significant business in Russia. According to ECB financial circles, these must regularly explain what effects possible sanctions or business restrictions would have on their liquidity situation.
In addition, the institutions should inform the financial regulator about the risks they see for their lending and trading books, what effects currency fluctuations would have on them and what contingency plans they have in place to maintain their business operations.
More: Interview with VTB Bank boss Andrej Kostin