According to Austria’s Financial Market Authority, the European Central Bank has shuttered, the European branch of Sberbank, Russia’s largest lender. The ECB had warned it threatened failure due to a run on deposits following Russia’s invasion of Ukraine. Sberbank Europe, situated in Vienna, is failing and will likely collapse under the European Central Bank’s Single Resolution Board (SRB). The Austrian Financial Market Authority (FMA) imposed an embargo on the bank’s operations on Monday as a result of this. The FMA’s statement that the bank will have to close late Tuesday came a little over an hour before the moratorium expired.
Prohibiting Russian Financial Institutions Continues
“The Austrian Financial Market Authority (FMA) issued a decision today preventing the licensed credit institution ‘Sberbank Europe AG’… from continuing business activities in their totality with immediate effect,” the FMA said at 10:45 p.m., citing an order from the European Central Bank (ECB). The European Union and the United States have retaliated against Russia’s invasion of Ukraine with a slew of penalties, including a move to exclude large Russian banks from participating in SWIFT, the world’s key payment system. Sberbank Europe said on Monday that many of its institutions had “seen a considerable outflow of client deposits in a very short period” as a result. According to the FMA, the SRB ordered the moratorium to evaluate if the issue should be handled under European bank resolution procedures; it ruled it should not.
The FMA said that it had an administrator to determine if and when the insolvency conditions are satisfied. In the interim, Austria’s deposit guarantee plan kicks in, covering deposits up to 100,000 euros ($111,240) per client, according to the FMA.
Slovenia’s and Croatia’s central banks stated that Sberbank’s activities in their respective nations would be taken over by Slovenia’s largest banking group NLB and the government-owned Croatian Postal Bank (HPB). After two days of limitations, customers will be able to withdraw money as usual on Wednesday.
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