The EU’s new package of sanctions also affects Russia’s second-largest bank.
(Photo: Reuters)
Frankfurt The German financial regulator Bafin has prohibited the major Russian bank VTB from exercising its voting rights in the subsidiary VTB Bank Europe. As a result, the parent company from Saint Petersburg lost control of its subsidiary.
The measure is the consequence of the EU’s fifth package of sanctions against Russia, which was just imposed in the wake of the Russian attack on Ukraine, Bafin announced on Sunday. On Saturday, the EU passed its new sanctions against Russia. This also includes a complete ban on transactions at the expense of four important Russian banks, including the country’s second largest bank, VTB.
According to the Bafin, VTB Bank Europe, based in Frankfurt, is no longer allowed to follow any instructions from the parent company. Weeks ago, the supervisory authority had already issued a ban on making payments or transferring assets in favor of the Russian mother. The supervisors emphasize that the daughter is now completely shielded.
>>Read also: VTB Europe in a state of emergency
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The operational business situation of VTB Bank Europe is basically unchanged, the assets and liquidity situation is still orderly, according to the Bafin announcement. “Depositors can continue to dispose of their money freely, and borrowers can service their loans with interest and principal. Other creditors of the bank may also be served accordingly and accept payments from the bank – unless they have been sanctioned themselves.” Other banks, service providers and employees may continue to work for VTB Bank Europe.
The Bafin and the Bundesbank have sent special representatives to the institute to oversee the “reduction of business activities”. The European subsidiary of VTB has been in a state of emergency since the Russian invasion of Ukraine. Four out of five board members have now left the money house. At the beginning of April, the only remaining board member was CFO Miro Zadro.
Customer deposits are likely to have fallen
VTB Europe has collected a lot of money, especially from German private investors. At the end of September, customer deposits amounted to 4.4 billion euros. In the meantime, however, this sum is likely to have fallen significantly. The European Central Bank classified the European subsidiary of the largest Russian financial institution Sberbank as “failing or likely to fail” after the outbreak of the Ukraine war and closed it.
VTB Bank Europe was spared this fate. According to information from the Handelsblatt, after a special audit at the end of February, the financial supervisory authority decided that the institute could continue to exist. “Should the situation of the bank change, Bafin will react promptly with appropriate measures,” says the supervisory authority’s statement on Sunday.
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