Russia’s Sberbank in Europe may close down

The European Central Bank warned today that the European arm of Sberbank, Russia’s largest lender, faced failing after savers demanded deposits as the financial impact of Russia’s invasion of Ukraine seeped through Europe.

Sberbank Europe and two other Sberbank subsidiaries are destined to fail, according to the ECB, due to substantial deposit withdrawals linked to “geopolitical tensions.”

The European Central Bank stated the bank is likely to default on its loans, while Austria’s Financial Market Authority put a suspension on Sberbank Europe, which is based there.

Separately, Deutsche Boerse, the German stock exchange operator, announced that it will stop trading a number of Russian issuers’ securities immediately. Sberbank and VTB Bank are among the banks on the list.

The developments highlight the impact of sanctions on Russia’s banks, as well as the financial system’s consequences throughout Europe.