The European subsidiary of the largest Russian bank is on the verge of bankruptcy

The European Union’s banking regulator announced this Tuesday that bankruptcy declaration procedures will be opened for major European subsidiary of Sberbank, the largest Russian bank. The assets of the subsidiary, registered in Austria and employing 4,000 people, will be capped for up to 100,000 euros, as indicated by European law, Single Resolution Boardresponsible for monitoring banks in crisis.

Although Sberbank has not been excluded from information system for Swift international payments, the institution has serious cash flow problems as it is unable to obtain loans due to sanctions imposed by the European Union. It is unlikely that the parent company will support the subsidiary because the Central Bank of Russia prohibits this type of transfer to countries that impose sanctions. On the other hand, European regulators have indicated that solutions have been found for other subsidiaries owned by Russian banks in Croatia and Slovenia,

Seven Russian entities will be suspended from Swift, following the EU’s request, Bloomberg reported on Tuesday. The list includes VTB (the second largest bank in the country), Rossiya, Otkritie, Novikombank, Promsvyazbank, Sovcombank and VEB. Apart from Sberbank, Gazprombank, which is linked to gas giant Gazprom and owned by its pension fund, was not included in the list. European sanctions have avoided touching Russia’s energy sector, on which several European countries depend for their oil and gas supplies. (afp)