Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict

The European Central Bank (ECB) has found that some European units of Russian lender Sberbank are failing or are likely to fail due to their worsening liquidity position in the wake of ongoing Ukraine crisis.

The ECB’s assessment covers Vienna-based Sberbank Europe AG and two of its subsidiaries — Sberbank d.d. in Croatia and Sberbank Banka d.d. in Slovenia.

Sberbank Europe AG is wholly-owned by public joint-stock company Sberbank of Russia, which counts the Russian government as its majority shareholder.

The conflict between Russia and Ukraine resulted in significant deposit outflows, which has impacted Sberbank Europe AG and its subsidiaries’ liquidity position, the ECB said.

Following the ECB’s assessment, Europe’s Single Resolution Board (SRB) has imposed a moratorium on Sberbank Europe AG along with its two subsidiaries.

Depositors will be able to withdraw a daily allowance amount, determined by the respective national resolution authorities, SRB said in a statement.

‘Retail depositors are protected up to €100,000 per depositor per bank in the European Union,’ the ECB added

With operations in the Federation of Bosnia and Herzegovina, the Republic of Srpska, the Czech Republic, Hungary, and Serbia, Sberbank Europe AG had €13.6bn in assets at end of 2021.

Notably, Sberbank along with others including VTB Bank, Sovcombank, Novicombank, Otkritie, Promsvyazbank and Rossiya is the primary target of sanctions from the West.

In response to the sanctions, the Russian central bank has decided to hike the key rate to 20% per annum.

“External conditions for the Russian economy have drastically changed. The increase of the key rate will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks. This is needed to support financial and price stability and protect the savings of citizens from depreciation,” the Bank of Russia said in its statement.