Out for Russian Sberbank will be expensive for Austria
On March 1, the Austrian Financial Market Authority (FMA) prohibited the continuation of all business operations with immediate effect. Sberbank Europe AG is a 100 percent subsidiary of Moscow-based Sberbank, which is majority-owned by the Russian state. The business license was revoked on the instructions of the European Central Bank (ECB).
The day before, the bank was allowed to carry out payments, transfers or other transactions in accordance with a moratorium by the FMA. Financial experts assume that Sberbank Europe AG will quickly slide into insolvency.
The European resolution authority, the Single Resolution Board (SRB), based in Brussels, had examined whether a reorganization or resolution of the bank under the special rights and obligations of the European resolution regime according to the European Bank Reorganization and Resolution Directive was in the public interest “and came to the conclusion that that this is not the case”, explained the FMA in a broadcast. Accordingly, the ECB instructed the FMA to implement the measures mentioned immediately.
Deposit insurance becomes effective
The ban on business operations triggers the deposit protection case. As a result, Einlagensicherung Austria GesmbH (ESA) must pay out secured deposits up to an amount of EUR 100,000 per customer within ten bank working days. In total, these are deposits of almost one billion euros (913 million euros).
Most of the customers came from Germany, the market was worked on from Vienna. In Germany, the bank operated under the “Sberbank Direct” brand. The customers there are managed via the branch of Sberbank Europe in Frankfurt am Main, which WILL also be liquidated. The Compensation Scheme of German Banks (EdB) handles the compensation procedure, but on behalf of the Austrian deposit insurance.
For around 120 Austrian depositors – these are all corporate customers – the compensation procedure will be handled directly, explains the ESA deposit guarantee. All Austrian banks must pay a proportionate share of the entire compensation amount. The failure of Sberbank Europe will therefore be expensive for domestic banks. The money is available in a deposit insurance payout account set up specifically for this case.
According to ESA boss Stefan Tacke, the amount to which the individual security systems have to pay results from the “covered deposits of the respective member institutions as of December 31, 2021”. From this, an approximate distribution of the burden of 40 percent for the ESA, 36 percent for Raiffeisen and 24 percent for the savings banks can be derived, according to Tacke
International Waves
Sberbank Europe was not only active in Austria and Germany, but also in Croatia, the Czech Republic, Hungary, Slovenia, Serbia and Bosnia-Herzegovina. However, as the Russian Sberbank announced on Wednesday, the bank now wants to withdraw entirely from Europe in view of the situation.
A solution has already been found for some countries. Thus, Sberbank in Slovenia was bought by the largest bank in the country, NLB. The Croatian subsidiary bank was taken over by the state postal bank, Hrvatska Postanska Banka (HPB). In Serbia, the takeover by the Serbian bank AIK, which is owned by Miodrag Kostic’s MK Group, was approved by the Serbian central bank.
“The decisions mean that these two banks will continue to serve their customers without interruption,” said the EU Commission in Brussels. “This will ensure that financial stability in Croatia and Slovenia is maintained and depositors are protected.”
In the Czech Republic, the National Bank (CNB) has started a license withdrawal procedure at Sberbank CZ. As in Austria, bankruptcy could also be imminent for Sberbank in the Czech Republic. The fate of the Sberbank subsidiaries in Hungary and Bosnia-Herzegovina is still unclear.