ECB: Sberbank Europe AG ‘Failing or Likely to Fail’ Due to Sanctions

28 February 2022

By David Barwick – FRANKFURT (Econostream) – The European Central Bank early Monday announced that Sberbank Europe AG, a wholly owned subsidiary of Russia’s Sberbank, was, along with its subsidiaries in Croatia and Slovenia, ‘failing or likely to fail owing to a deterioration of their liquidity situation.’

The assessment ‘follows deposit outflows as a result of the reputational impact of geopolitical tensions’, the ECB said, referring to sanctions imposed on Russia internationally in the wake of naked military aggression against Ukraine by Russian dictator Vladimir Putin.

The ECB said it ‘took the decision after determining that, in the near future, the bank is likely to be unable to pay its debts or other liabilities as they fall due.’

The ‘significant’ deposit outflows ‘led to a deterioration of its liquidity position’, the ECB said. ‘And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.’

EU retail depositors enjoy up to €100,000 of protection per depositor per bank, the ECB reminded.

‘In line with its mandate, the Single Resolution Board needs to confirm the ECB’s failing or likely to fail assessment and will decide on and implement subsequent steps’, the ECB said. Sberbank Europe AG had €13.6 billion in assets as of end-2021.