A reorganization or liquidation of the bank according to the European Bank Reorganization and Resolution Directive is not in the public interest, it said.
(Photo: Reuters)
Frankfurt The European subsidiary of the Russian Sberbank, which is affected by sanctions, has to stop operations. On the instructions of the European Central Bank (ECB), the Austrian Financial Market Authority (FMA) has prohibited the institute from continuing its business operations. The FMA announced this on Wednesday night.
According to the Single Resolution Board (SRB), the European resolution authority for banks, a reorganization or resolution of the bank in accordance with the European Bank Reorganization and Resolution Directive is not in the public interest. Sberbank Europe AG, based in Vienna, is a wholly owned subsidiary of the largest Russian financial institution, Sberbank.
With this step, the compensation of the investors starts automatically. Customer balances are secured up to EUR 100,000 per person by Einlagensicherung Austria (ESA). Access to the accounts is no longer possible.
A total of around 35,000 accounts with a total balance of around one billion euros are said to be affected. Of this, 913 million are secured by the Austrian deposit insurance, said the German Bank Compensation Scheme (EdB) on its website. The customers come almost exclusively from Germany. In Germany, Sberbank Europe is represented by the Sberbank Direct branch.
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Therefore, the Austrian deposit insurance compensates, but the EdB takes over the operational processing. “The EdB will shortly contact the depositors on behalf of the ESA in order to make the compensation. Customers do not have to take action themselves,” says the EdB.
A watchdog appointed by the FMA is now to determine whether and, if so, when Sberbank Europe is deemed to be insolvent.
Sanctions hit the institutes hard
In the US, Russia’s Sberbank is already on sanctions lists for Russia’s attack on Ukraine, and the EU has also imposed sanctions on banks that are more than 50 percent owned by the Russian state. This applies to Sberbank.
The previous sanctions had already led to the ECB declaring on Monday that Sberbank Europe and its Croatian and Slovenian branches are or will soon be insolvent.
“Sberbank Europe AG and its subsidiaries have experienced significant deposit outflows due to the impact of geopolitical tensions on their reputation,” the ECB said. “This led to a deterioration in their liquidity situation.” There is no way that would offer a realistic chance of restoring liquidity.
Croatian and Slovenian offshoots are sold
As a result, the Austrian supervisory authority FMA imposed a payment moratorium on the Vienna-based European subsidiary of Sberbank. She was therefore not allowed to “carry out any withdrawals, transfers or other transactions”. The only exception was for depositors, who were allowed to withdraw a maximum of 100 euros per day to secure “essential daily needs”. The payment moratorium would have expired on Wednesday night.
According to the SRB, unlike Sberbank Europe, both the Croatian and the Slovenian branch will be sold. The Croatian Postbank (HPB) takes over the domestic Sberbank branch, while the Slovenian branch is bought by the Slovenian banking group NLB.
After the restrictions of the past two days, the two banks would open as usual on Wednesday without any adverse effects for customers, the SRB said.
With agency material
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