ECB to monitor wind-down of lender in Cyprus

The European Central Bank has taken the unusual step of appointing a temporary administrator to oversee the wind-down of RCB Bank, a Cypriot institution with close ties to Russia.

The decision was made public on Thursday, and it means that RCB, which was founded in 1995 as a subsidiary of Russia’s state-owned VTB Bank, would return or transfer its €2.8 billion in client deposits to another bank, as first reported by the Financial Times.

It has been forbidden from committing to new loans, deposits, or investments. It was previously known as Russian Commercial Bank.

“Although RCB has been, and remains, abundant in liquidity and capital, the ongoing and extremely volatile geopolitical situation requires it to transform and adopt a new strategy — phasing out banking operations while ensuring that the best interests of its clients are secured,” the bank said in a statement on Thursday.

The institution is effectively winding down before clients’ concerns about the conflict in Ukraine force it into the same destiny as Sberbank’s Austrian unit, which was thrown into administration earlier this month after a run on its accounts.