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Russia’s biggest lender Sberbank exits Europe

Russia’s biggest lender Sberbank exits Europe

Sberbank, Russia’s biggest lender, has stated that it is withdrawing from Europe as a result of the harsh sanctions imposed by Western nations in reaction to Moscow’s invasion of Ukraine.

According to a statement released on Wednesday and cited by Russian news outlets, Sberbank has chosen to withdraw from the European market due to the present economic situation.

The European subsidiaries of the state-controlled bank were witnessing “abnormal cash withdrawals and threats to the safety of workers and branches,” according to the statement.

In response to a central bank directive, the bank said that it would no longer be able to provide liquidity to its European subsidiaries, but that its capital and asset quality were adequate to pay all depositors in full.

The announcement occurred at the same time as Sberbank revealed record annual earnings for 2021.

European Union sanctions

Ukraine claims that hundreds of people, including children, have been murdered since Russian soldiers poured into the country last week to complete President Vladimir Putin’s purpose of toppling the pro-Western government of President Volodymyr Zelenskyy’s administration. The Kremlin has said that civilian infrastructure would not be targeted during what it refers to as a “special operation.”

The extraordinary measures adopted by Western countries to isolate Russia’s economy and banking system due to the invasion have included penalties on the country’s central bank and the withdrawal of some of the country’s bankers from the global payments system, SWIFT, among others.

Before the conflict even started, the European Central Bank had already ordered the closure of Sberbank’s European unit, after warning that the bank was on the verge of bankruptcy due to a run on its deposits prompted by the reaction against it.

According to the Bank of Russia, Sberbank has European assets of 13 billion euros ($14.4 billion) as of December 31, 2020, with operations in Austria, Croatia, Germany, and Hungary, among other countries.

The European Central Bank said that Sberbank’s Austria-based European subsidiary, Sberbank Europe AG, would be permitted to undergo “regular insolvency processes,” and that its branches in Croatia and Slovenia would be sold to local banks.

Slovenian bank NLB announced that it has agreed to purchase Sberbank’s Slovenian business.

The bank’s activities in Switzerland are unaffected by the decision to leave.

The net profit of Sberbank for 2021 increased by 64 percent year on year to 1.25 trillion roubles ($12.38 billion). Net interest income of 1.8 trillion roubles and a return on equity of 24.2 percent were the highlights of the company’s performance in 2018.

Despite the fact that the Moscow Exchange has paused stock trading in order to prevent capital outflows from Russian assets, Sberbank’s depositary receipts in London have lost their entire value, plummeting to zero.

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