Sberbank, Russia’s biggest lender, is pulling out of the European market, after it said it faced large outflows of cash in the region as well as threats to the safety of its employees and branches.
The bank said its European subsidiaries had faced “abnormal cash outflows”, meaning it could no longer supply them with liquidity. However, Sberbank said it had sufficient capital to be able to make payments to all of its depositors.
Sberbank has been operating in Germany, Austria, Croatia, and Hungary among other countries, and had European assets worth €13bn (£10.8bn) at the end of 2020.
The announcement came only hours after the European Central Bank ordered the closure of Sberbank Europe, warning the business could fail following a run on deposits because of Vladimir Putin’s invasion of Ukraine.
However, Sberbank said its Swiss subsidiary was not affected by the decision as it was not part of its European arm.
“The bank in Switzerland continues to work as normal, there have been no changes to the bank’s operations. Sberbank (Switzerland) AG has sufficient capital and assets in order to continue operations,” said a spokesperson, Polina Trizonova.
Sberbank’s London-listed shares crashed by as much as 95% in early trading on Wednesday after the news, taking their price to only $0.01. The company’s main Russian-listed shares are not currently trading, as the Moscow stock exchange remained closed for the third day in a row after the country’s central bank suspended trading.
The UK, EU and US have been ramping up sanctions and taking unprecedented measures to squeeze Russia’s economy, including blocking the country’s access to the Swift international banking payment system and restrictions on the Russian central bank.
Sberbank was among the list of Russian banks added to the UK and US sanctions lists after the invasion, with the British government highlighting the Kremlin’s controlling share and saying it was a “highly significant entity”.
The lender has played a significant role in financing Russian companies, including those listed on the London Stock Exchange.
Sanctions are beginning to bite in Russia, where the rouble has tumbled in value since trading began on Monday morning, prompting the country’s central bank to double interest rates to 20%, and suspend trading on the Moscow stock exchange.
On Wednesday, Sberbank reported a record annual net profit for 2021 of 1.25tn roubles (£9.4bn), a jump of 64% compared with a year earlier. It is unlikely to reach such levels of earnings again in the near future, as it grapples with sanctions and after its departure from the European market.