The first bank to go bankrupt over new sanctions against Russia is the Austrian branch of Sberbank

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Austria’s operations with Sberbank, Russia’s largest lender, must go bankrupt as its Croatian and Slovenian stakes are transferred to new owners by the EU’s body responsible for restructuring bankrupt banks.

The move was announced by the EU’s Single Restructuring Council on Tuesday night, making Sberbank’s Austrian branch the first bank victim of large-scale sanctions imposed on Russia in response to its invasion of Ukraine.

SRB has already halted most of Russia’s state-owned bank’s activities this week after customers rushed to withdraw money in response to Western sanctions.

SRB said on Tuesday that it has decided to transfer all shares of the Croatian subsidiary of Sberbank to Hrvatska Poštanska Banka, while its Slovenian division will be transferred to Nova Ljubljanska Banka. It says the two banks will open on Wednesday.

“SRB also decided that no restructuring was needed for the Austrian parent of Sberbank Europe AG,” he added. “Insolvency proceedings will be conducted in accordance with national law. Eligible deposits of up to EUR 100,000 are protected by the Austrian Deposit Guarantee Scheme. ”

This is only the second time SRB has taken control of a troubled bank since it was established in 2015 as a pan-European body with powers to impose losses on shareholders and junior bondholders of bankrupt creditors in a bid to evade government bailouts in the sector. .

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The last time SRB took control of a bank through a formal restructuring process was when it organized the sale of Spanish Banco Popular to its rival Banco Santander for 1 euro in 2017.

Sberbank Europe has about 800,000 retail and corporate customers in Central and Eastern Europe, with almost 4,000 employees and total assets of € 13 billion. The Russian bank set up its European subsidiary when it acquired Austria’s Volksbank International in 2012.

Sberbank Direct, its online banking operation, has sought to expand its deposit base by offering German depositors 1.5% interest rates on their money – much higher than the near-zero interest rates offered by most local lenders.

Last year, however, the Russian bank agreed to sell its operations in Bosnia and Herzegovina, Croatia, Hungary, Serbia and Slovenia to a consortium of banks led by Slovenia’s AIK Banka. But the deal was not completed and was undermined by the collapse of Sberbank’s operations in the EU.