UPDATED: Russia’s Sberbank says it lost control of European subsidiaries after liquidity crisis

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MOSCOW, March 2 (Reuters) – Russian lender Sberbank on Wednesday said its European subsidiaries experienced a liquidity crisis after the imposition of western sanctions, resulting in the bank losing control of those units in the first quarter of the year.

Sberbank, which reported record profits for 2021 on Wednesday, in November said it was selling some of its subsidiaries in Europe with total assets of 7.329 billion euro ($8.12 billion) to focus on other markets.

Russia’s largest lender, Sberbank , earlier said is leaving the European market as its subsidiaries there face large cash outflows and threats to the safety of employees and property, the bank said on Wednesday.

The bank, which is set to unveil 2021 financial results later in the day, said it was no longer able to supply liquidity to European subsidiaries, but its capital level and asset quality were sufficient to make payments to all depositors.

“In the current situation, Sberbank has decided to leave the European market,” it said in a statement. “The group’s subsidiary banks have faced abnormal cash outflows and threats to the safety of its employees and branches.”

Unprecedented steps by Western nations to isolate Russia’s economy and financial system over its invasion of Ukraine include sanctions on its central bank and the exclusion of some of its lenders from global payments system SWIFT.

On Monday, the European Central Bank (ECB) warned that Sberbank’s European arm faced closure after a run on its deposits sparked by the invasion backlash. 

Sberbank, which operates in Austria, Croatia, Germany and Hungary among other nations, had European assets worth 13 billion euros by Dec. 31, 2020.

(Reporting by Reuters; Editing by Clarence Fernandez)

Photo – Exterior view on the logo of the Russian Sberbank Europe AG bank headquarters in Vienna, Austri. EPA-EFE/CHRISTIAN BRUNA

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