The major Russian bank Sberbank is ending its operations in European countries among the sanctions from US. The move has been seen as a business response to the economic pressure that Europe and Russia are under, with many analysts predicting more such decisions for banks all over the world.
Russia’s Sberbank Pulls Out Of Europe Amid Intense Sanctions. The sanctions that have been imposed on Russia by the European Union are causing a lot of problems for businesses in Russia, and Sberbank is no exception.
- Following an ECB directive, Sberbank has exited the European market.
- According to the company, it is facing financial withdrawals as well as threats to its employees and property.
- It claims to have sufficient funds to refund all depositors.
- Net profit for 2021 increased by 64% to 1.25 trillion rubles, a new high.
Sberbank (SBER.MM), Russia’s biggest lender, has faced threats to its personnel and massive cash withdrawals as a result of Russia’s invasion of Ukraine and Western sanctions, prompting it to exit practically all European markets.
The move looked inescapable when the European Central Bank (ECB) ordered the bank’s European unit to close. The bank warned that the invasion, which Moscow refers to as a “special operation,” has caused a run on deposits.
This information was revealed on March 2 when the state-controlled Sberbank announced record yearly earnings for 2021. The lender claimed it was no longer allowed to deliver liquidity to European businesses due to an order from Russia’s central bank, which is attempting to conserve foreign currency. It did say, however, that its assets and capital were sufficient to satisfy all depositors.
Some Russian firms are suffering pressure as a result of extraordinary efforts taken by the West to isolate Moscow, including the suspension of some of its banks from the global payments system SWIFT and sanctions against its central bank, as emphasized by the move.
The Russian central bank governor, Elvira Nabiullina, said on Wednesday that the country’s economy was in a dire state and that she was doing all she could to guarantee the financial system could withstand any shock. In a statement, the bank said:
“In the present environment, Sberbank has made the decision to exit the European market.” Anomaly financial outflows and threats to the safety of the group’s personnel and branches have been experienced by the group’s subsidiary banks.”
Sberbank has 13 billion euros ($14.4 billion) in European assets as of December 31, 2021, with operations in Croatia, Hungary, Germany, and Austria, among others. Following the imposition of sanctions, European subsidiaries faced a liquidity problem, and the bank lost control of those divisions in the first quarter of this year.
Sberbank stated in November that it aimed to complete the sale of its businesses in Herzegovina and Bosnia, Slovenia, Hungary, Croatia, and Serbia in 2021, in a transaction valued roughly 500 million euros. NLB, a Slovenian bank, purchased the Slovenian operation (NLBR.LJ).
Sberbank has not provided an update on the other prospective transactions as of yet.
The bank’s operations in Switzerland, it added, were unaffected by the pullout and were operating as normal.
LEAP INTO PROFIT
Sberbank’s net profit for 2021 increased by 64% year on year to 1.25 trillion rubles ($12.38 billion). Its net interest income was 1.8 trillion rubles, and its return on equity was 24.2 percent for the year.
CEO German Gref, who has remained silent since the crisis began, characterized the performance as “excellent,” but said the emphasis was now on “the new problems that the Russian economy and banking industry are confronting.”
The bank canceled its investor call to discuss the findings. The Moscow Exchange has paused stock trading in order to prevent cash outflows from Russian assets. Sberbank’s depositary receipts in London, on the other hand, dropped more than 90% to 1.7 cents on Wednesday.
Russia’s Sberbank pulled out of Europe amid intense sanctions. The bank has ceased all operations in the European Union, as well as other countries including Britain and Switzerland. Reference: sberbank russia.
