Sberbank Europe AG Is ‘Likely to Fail’ according to the European Central Bank

The European Central Bank (ECB) assessed earlier today that 'Sberbank Europe AG and its subsidiaries in Croatia and Slovenia are failing or likely to fail'.

Although stocks trading in Russia has been halted, Sberbank is still traded on the London Stock Exchange. The stock has been hammered, plummeting 68% at the time of writing.

source: London Stock Exchange

The ECB wrote the following in its assessment:

"The European Central Bank (ECB) has assessed that Sberbank Europe AG and its two subsidiaries in the banking union, Sberbank d.d. in Croatia and Sberbank banka d.d. in Slovenia, are failing or likely to fail due to the deterioration of their liquidity situation.

"The ECB took the decision after determining that, in the near future, the bank is likely to be unable to pay its debts or other liabilities as they fall due. Sberbank Europe AG and its subsidiaries experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions.

"This led to a deterioration of its liquidity position. And, there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union."

ECB Full Assessment

The Single Resolution Board (SRB) decided that 'Sberbank Europe AG in Austria and its subsidiaries in Croatia (Sberbank d.d.) and Slovenia (Sberbank banka d.d.) are failing or likely to fail'.

'As a result, until 1 March 23:59:59 all payment or delivery obligations pursuant to any contract to which Sberbank Europe AG, Sberbank d.d. (Croatia) or Sberbank banka d.d. (Slovenia) are parties, including eligible deposits, are suspended.' There were several exceptions.

SRB Decision

Sberbank Withdrawal Limits

Additionally, Sberbank Europe AG has subsidiaries in Hungary, Serbia, the Czech Republic and Bosnia. The ECB has no jurisdiction over these subsidiaries. All EU countries have up to 100,000 euros worth of protection on their deposits, which also includes Slovenia, the Czech Republic, Croatia and Hungary.

In Serbia and Bosnia, the deposit protection ranges from 25,000 to 50,000 euros.

In Croatia, Sberbank's clients are currently unable to withdraw more than 1,000 euros per day. Slovenia is facing tougher limits, only 400 euros per day and the banks' branches will be closed for the next 48 hours.

According to local reports in Slovenia, child welfare payments to Sberbank customers are being rejected. Greater difficulties with bank transfers are also anticipated.

The Czech central bank said it is in the process of revoking the license of Sberbank CZ.

In our coverage of the Russia-Ukraine Conflict, we highlighted that the 3 European banks have some exposure to Russia, Unicredit, Societe Generale and Raiffeisen Bank.

Societe Generale is currently down 11% (approx.)

Unicredit is currently down 12% (approx.)

Raiffeisen Bank is currently down 15% (approx.)

The potential collapse of Sberbank in Europe may force the ECB to intervene and change the central bank's views on tightening monetary policy.