Sberbank is leaving almost all European markets, the bank announced on Wednesday, in a major move that comes amid pressure from Western sanctions leveled against Russia’s largest lender in response to Moscow's invasion of Ukraine.
Sberbank blamed big cash outflows at its affiliates in Europe and threats to its staff and property, the bank said in a statement, cited by Reuters and Agence France-Presse (AFP).
The news came as the state-controlled bank reported record annual profits for 2021.
The bank said it was no longer able to supply liquidity to European subsidiaries, following a central bank order, but its capital level and asset quality were sufficient to pay all depositors.
“In the current situation, Sberbank has decided to leave the European market,” it said. “The group’s subsidiary banks have faced abnormal cash outflows and threats to the safety of its employees and branches.”
Sberbank suffered financing issues following the announcement of tough European Union sanctions aimed at choking off Russian banks' access to capital markets.
Since Russian troops rolled into Ukraine last week to achieve Russian President Vladimir Putin's mission of overthrowing the pro-Western government of Ukrainian President Volodymyr Zelenskyy, hundreds of civilians including children have been reportedly killed.
Unprecedented steps by Western nations to isolate Russia’s economy and financial system include sanctions on its central bank and the exclusion of some of its lenders from global payments system SWIFT.
European banking regulators said Tuesday that the European subsidiary of Russia's Sberbank would be wound up.
The European Central Bank (ECB) had already ordered the closure of Sberbank's European arm, after warning it faced failure because of a run on its deposits sparked by the backlash to the invasion, which Moscow calls a "special operation."
Sberbank, which had operations in Austria, Croatia, Germany and Hungary among other nations, had European assets worth around 13 billion euros (around $14.45 billion) by Dec. 31, 2020.
The lender's Austria-based European arm, Sberbank Europe AG, will be allowed to enter "normal insolvency proceedings," while branches in Croatia and Slovenia were sold to local banks, the European banking supervisory authority said.
Slovenian bank NLB said it was acquiring Sberbank's unit in the country.
The exit does not affect the bank's operations in Switzerland.
Sberbank's net profit for 2021 jumped 64% year on year to 1.25 trillion roubles ($12.38 billion). Return on equity for the year was 24.2% and its net interest income stood at 1.8 trillion roubles.
The Moscow Exchange has halted trading on stocks and sought to prevent capital outflows from Russian assets, but Sberbank's depositary receipts in London have lost their entire value, falling to $0.
