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The extent of economic sanctions plunges subsidiaries



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The European Central Bank (ECB) has announced that European subsidiaries of Sberbank – Russia’s largest bank – are at risk of collapsing as a result of economic sanctions imposed on Moscow by the EU, the US and Canada.

Other major European banks have problems, such as Raiffeisen in Austria, Unicredit in Italy and Société Générale in France.

According to SpotMedia, which quotes the Financial Times, about a third of Raiffeisen’s profits (from Austria, not its Romanian subsidiary) come from Russia. Under these conditions, the bank’s profits decreased by about 18%, and the value of its shares decreased by about 50% in the last 3 weeks.

In this context, the director of Raiffeisen, Johann Strobl, stated, according to the Financial Times:

“Our subsidiary in Russia is in a good position in terms of liquidity and records inflows (currency – ed.). The capital position is also solid.

Our Russian customers trust our bank. It is a proven thing over and over again in previous crisis situations “, Strobl specified.

The Italians from Unicredit, whose shares have decreased by 28% on Monday, in the last 3 weeks, also risked big problems, the prestigious financial publication also transmitted.

However, according to the Financial Times, Unicredit said it was following developments in Russia and that it had “strong positions in the liquidity and capital markets”.

He also risks problems with the French from BRD Societe Generale who have exposure on the Russian market, the financial publication also appreciated.

Russia’s largest banks, Sberbank and VTB, have problems in Europe

The European Central Bank notes that Sberbank’s European “arms” are facing massive deposit withdrawals, the ECB said.

“Liquidity is deteriorating rapidly” at Sberbank Europe in Austria and its subsidiaries in Croatia and Slovenia, said the Single Resolution Committee (SRB), which is the European Banking Authority’s authority and deals with bankrupt banks.

SRB announced that it had taken action indicating that any issuance of a payment order and the actual payment had been suspended at a Sberbank Europe subsidiary.

“Those who have deposits will be able to withdraw a daily amount, determined by the national authorities,” SRB said. The authority also said that deposits of up to 100.00 euros will be guaranteed by each Sberbank branch.

But it is not clear what this means for customers and the bank. According to the latest report, the Austrian subsidiary of Sberbank had assets of 13.6 billion euros.

Overall, Sberbank Europe – created in 2012 when the Russian bank took over Volksbank – has around 800,000 corporate and retail customers.

In some countries, such as Germany, the Sberbank subsidiary has attracted good customers. For example, it offered interest rates on deposits of 1.5%, given that most German banks offered interest rates below 1%. It remains to be seen whether he will be able to keep his clients in this crisis situation.

However, Sbernak is not the only bank in Russia that has major problems due to Western sanctions.

VTB Bank, Russia’s second-largest bank, has frozen assets. The bank has a subsidiary in Frankfurt, which the German authorities monitor, together with BaFin, the federal financial supervisory authority.

VTB Bank has already been prevented from sending money to Russia. He can work with the clients he already has, but he can’t receive new clients during this period.