People queue outside a branch of Russian state-owned bank Sberbank to withdraw their savings and close their accounts following Russia's attack on Ukraine.
People queue outside a branch of Russian state-owned bank Sberbank to withdraw their savings and close their accounts following Russia's attack on Ukraine.MICHAL CIZEK/AFP via Getty Images
  • Sberbank said Wednesday it is withdrawing from Europe, where its subsidiaries faced an "exceptional outflow of funds."
  • The ECB ordered Russia's largest lender to close the businesses due to the risk of failure, the Austrian regulator said.
  • Its London-listed shares plummeted 95% and are now worth less than 1 penny, as the Russian invasion persists.

Sberbank's London-listed shares plunged 95% early Wednesday after Russia's biggest bank said it was exiting the European market, given exceptional outflows of deposits and fears for its staff.

The move came after the Austrian financial regulator said late Tuesday it had told Sberbank Europe to stop operations immediately, on the instructions of the European Central Bank.

"In light of the current situation Sberbank has taken the decision to withdraw from the European market," Sberbank said in a statement Wednesday.

"The group's subsidiary banks have faced an exceptional outflow of funds and a number of safety concerns regarding its employees and offices."

Sberbank's shares on the London stock exchange plummeted by as much as 95% to $0.01 Wednesday morning, having traded at $16.12 at the start of 2022. They recovered slightly to trade at $0.02 at last check.

The bank's depository receipts — certificates representing shares — are listed in London, although its main stock listing is in Moscow.

The majority state-owned lender said that due to a directive from the Central Bank of Russia, it could no longer provide liquidity to its European subsidiaries. 

The US on Thursday cut off Sberbank's direct access to the dollar via an order to its banks, as part of sanctions coordinated with allies in response to Russia's attack on Ukraine.

The financial measures became more severe Saturday when Western powers disconnected Russian banks from SWIFT, the messaging network that underpins the global payments system.

On Monday, Sberbank said it had registered a significant outflow of client deposits within a very short time, and that it was restricting daily cash withdrawals.

The same day, the ECB said it had determined that Sberbank Europe and its subsidiaries in Croatia and Slovenia were failing or likely to fail, and warned of a run on the banks.

Austria's Financial Market Authority said late Tuesday that under instruction of the ECB, it was banning Sberbank Europe from continuing business operations, with immediate effect. 

Sberbank Europe has businesses in Austria, Croatia, Germany and Hungary, with assets worth over $14 billion.

The Russian lender's Austrian operations will go into insolvency, and the Croatian and Slovenian businesses will be transferred to new owners, the Financial Times reported.

Its Swiss subsidiary said Wednesday that it will continue to operate as normal, as it is not party of the Sberbank Europe group.

Read more: Macro strategists at a $900 billion asset manager break down how war in Ukraine and the related energy market turmoil could derail the Fed's monetary policy plans — and reveal which countries' stock markets are best placed to ride out the storm

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