The collateral losses caused by the EU decision to partially exclude Russian banks from the SWIFT interbank messaging system, have now begun to become visible. The European Central Bank warns that Sberbank Europe AG and its subsidiaries in Croatia and Slovenia are now insolvent or are likely to find themselves in this situation very soon.
The Austrian parent bank Sberbank Europe AG is wholly owned by the Russian Public Limited Company Sberbank, the majority shareholder of which is the Russian Federation (50% plus one voting share).
The ECB took the decision after finding that, in the near future, the bank may not be able to repay its debts or other liabilities as they become due.
Sberbank Europe AG and its subsidiaries showed significant outflows of deposits as a result of the impact of the reputation of geopolitical tensions. This led to a deterioration in its liquidity position. And there are no measures available with a realistic possibility of restoring this position at group level and to each of its subsidiaries within the banking union, according to the Athens News Agency.
The ECB states that Private depositors are protected up to 100,000 Euros per depositor per bank in the European Union. This protection is provided by the deposit guarantee schemes in force in Austria, including the German branch of the bank, Croatia and Slovenia.
According to its mandate, the Single Resolution Council must confirm the failure or possibility of failure of the ECB evaluation and will decide and implement the next steps.
Sberbank Europe AG has subsidiaries in the Federation of Bosnia and Herzegovina, the Republika Srpska, the Czech Republic, Hungary and Serbia. The ECB has coordinated with the national competent authorities in these jurisdictions throughout the process.
Facts about Sberbank
- Sberbank Europe AG is one of the seven Austrian banks directly supervised by the ECB. It is headquartered in Vienna.
- The ECB assumed direct supervision of Sberbank Europe AG in 2014, when the ECB Banking Supervision was established. The bank was deemed important due to the extent of its cross-border activities.
- Sberbank Europe AG has subsidiaries in the Federation of Bosnia and Herzegovina, the Republika Srpska, the Czech Republic, Croatia, Hungary, Slovenia and Serbia. It also has a branch in Germany.
- At the end of 2021, the bank had 13.6 billion euros in assets.
It is noted that the analyst of Credit Suisse Group AG Zoltan Pozsar, in yesterday’s note published by Bloomberg, estimates that the exclusion of the largest Russian banks from the SWIFT system is likely to lead to situations similar to those caused by the collapse of Lehman Brothers. As he notes, it is possible that there will be huge defaults from Russia, but also giant overdrafts, which in order to cover them, the Central Banks will have to intervene by throwing dollars on the market.
Source: News Beast
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