The largest Russian bank hit by international sanctions (one of the country’s leading institutions), Sberbank, collapsed yesterday on the stock market (-65% on the London Stock Exchange). Its fall is also linked to the decision taken overnight by the ECB to declare the European branch, Sberbank Ag with headquarters in Austria, “failing or likely to fail”, therefore likely to fail. The emergency intervention of the ECB is due to the liquidity crisis that occurred after the numerous withdrawals by depositors “following the reputational impact of geopolitical tensions”.
A crisis of confidence that prompted customers to rush to ATMs and counters to withdraw money. Sberbank Ag has branches in various European countries: in essence it is the bank used by Russians residing abroad. However, the document released yesterday by the ECB seems to draw a dividing line between the fate of the branches that are present in the countries that are part of the euro area – and therefore the banks are supervised by the ECB – and those located in other countries. Sberbank Ag is present in Austria, Germany, Slovenia, but not only. In the statement released yesterday by the central bank, which started the supervision of Sberbank Ag in 2014, it is specified that the protection for deposits of up to 100 thousand euros ensured by national interbank guarantee funds “is guaranteed by the guarantee systems present in Austria, Croatia and Slovenia “. However, the bank also has branches in other countries: Bosnia and Herzegovina, the Czech Republic, Hungary and Serbia.
The guarantees provided for the euro area, therefore, would not be valid in these other countries. In any case, the destinies of the Austrian branch of the Russian bank will be decided in the next few hours by the Single Resolution Board which will have to sanction the probable bankruptcy and establish which path for the management of the crisis the bank will have to adopt. The ECB in its document explains that it is a “significant” bank for potential systemic effects due to the extent of its cross-border activities. Precisely for this reason it falls within the European directive on banking crises launched in 2015. It cannot be ruled out that for the Russian institute the path of real bail is taking shape, which until now had never been applied to European banks. In essence, all the burden will be shared on customers (with deposits over 100 thousand euros in the euro area and on investors).
The path could be different, however, for branches outside the euro area. The SRB yesterday set a ceiling on withdrawals pending a decision: in Croatia, customers are allowed to withdraw a maximum of around one thousand euros per day over the next two days. In Slovenia, the branches will be closed for the next two days and then withdrawals will be limited to 400 euros per day. In both Slovenia and Croatia, the bank had temporarily closed its branches. Sberbank Ag has 13.6 billion assets of 3,933 employees.