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Germany has ramped up assessment of VTB Bank’s European arm as the latter faces a possible closure of operations in the continent, Bloomberg reported.

The move is aimed to prevent the automatic activation of a deposit insurance scheme following the potential exit of VTB Bank in Europe. The German authorities fear that this may result in multi-billion-dollar upfront payment impacting other banks in the country.

VTB Bank is currently being assessed by the German central bank, the financial markets regulator and deposit insurance bodies, Bloomberg added quoting sources familiar with the matter.

The sources further told the publication that the regulators are seeking to gain more time for VTB Europe in a bid to avoid the fallout.

At the end of September 2021, VTB Bank Europe had around €7.95bn in assets.

Recently, it was reported that VTB Bank is preparing to shutter its operations in Europe after an array of sanctions was placed on Russia as a retaliatory measure following its invasion of Ukraine.

The Russian lender’s European headquarter is located in Frankfurt in Germany.

A spokeswoman of Federal Financial Supervisory Authority (BaFin) told the publication that the German regulator is currently working with VTB’s local unit.

She further added that the bank is not onboarding new clients and clients, who are not affected by new sanctions, can access their deposits.