Three European subsidiaries of Russia's largest bank, Sberbank, have been declared "failing" or "likely to fail" by the European Central Bank (ECB) due to a "deterioration of their liquidity situation."
Sberbank Europe AG, based in Austria, and its subsidiaries in Croatia and Slovenia, according to the ECB, are failing or are likely to fail as a result of the "reputational impact of geopolitical tensions."
The three entities are directly supervised by the ECB, with Sberbank Europe AG owned entirely by Russia's state-owned lender Sberbank.
The ECB stated that it made the decision after determining that the bank is "likely to be unable to pay its debts or other liabilities as they fall due," in the near future.
The bank's liquidity has deteriorated as a result of international sanctions imposed on Russia's financial sector in the aftermath of its invasion of Ukraine.
Sberbank Europe AG has subsidiaries in Bosnia and Herzegovina, the Republic of Srpska, the Czech Republic, Hungary, and Serbia, and as of the end of 2021, it had €13.6 billion in assets.
Sberbank Europe AG was placed under direct supervision by the ECB in 2014 after it was deemed significant due to its cross-border activities.
Last week, ECB President Christine Lagarde called Russia's invasion of Ukraine a "dark moment for Europe" in a statement.
The ECB will conduct a "comprehensive assessment of the economic outlook," according to Ms Lagarde, which will be the basis for its policy meeting on March 10th.
She promised that the ECB would ensure "smooth liquidity conditions and access of citizens to cash" and that sanctions approved by the EU and European governments would be implemented.
By fLEXI tEAM