ECB Orders European Arm Of Russia's Sberbank Closed, Austria's FMA Says

The European arm of Sberbank, Russia's biggest lender, has been closed by order of the European Central Bank, which had warned it faced failure due to a run on deposits after Russia invaded Ukraine, Austria's Financial Market Authority said.

The European Central Bank's Single Resolution Board (SRB) determined earlier this week that Sberbank Europe, which is based in Vienna, was failing or likely to fail. That prompted Austria's FMA on Monday to impose a moratorium on the bank's activities.

The FMA's announcement late on Tuesday that it was ordering the bank to close came just over an hour before that moratorium was due to expire.

"By order of the European Central Bank (ECB), the Austrian Financial Market Authority (FMA) issued a decision today banning the licensed credit institution 'Sberbank Europe AG' ... from continuing business operations in their entirety with immediate effect," the FMA said in a statement at 10:45 p.m. (2145 GMT).

The European Union and United States have responded to Russia's invasion of Ukraine with a battery of sanctions including moving to ban big Russian banks from SWIFT, the main global payments system.

As a result, Sberbank Europe said on Monday that several of its banks had "experienced a significant outflow of customer deposits within a very short period of time".

The SRB ordered the moratorium so that it could determine whether the case should be handled under European bank resolution rules and decided it should not, the FMA said.

The FMA said it had appointed an administrator who is tasked with determining whether and when the criteria of an insolvency are met. In the meantime, the closure triggers Austria's deposit guarantee scheme, which covers deposits up to 100,000 euros ($111,240) per customer, the FMA said.

The central banks of Slovenia and Croatia announced that Sberbank's operations in their countries would be taken over respectively by Slovenia's biggest banking group NLB and the Croatian Postal Bank (HPB), which is majority owned by the government.

Customers will be able to withdraw money as normal from Wednesday after restrictions over the past two days.

Sberbank Europe said in November it had reached a deal to sell its subsidiaries in Croatia, Slovenia, Hungary, Serbia and Bosnia and Herzegovina to a group including Serbia's AIK bank and Slovenia's Gorenjska bank.

Serbian regulators gave their consent on Monday but Gorenjska said it was no longer viable to proceed with the acquisition of the Slovenian subsidiary.

Sarajevo-based ASA Banka acquired Sberbank Sarajevo, the banking agency of Bosnia's Bosniak-Croat Federation said late on Tuesday, while the the Serb Republic government acquired Sberbank Banja Luka on Monday.

($1 = 0.8990 euros)