FRANKFURT the 28th of February (Reuters) – – The European Central Bank on Monday warned that Sberbank Europe, a subsidiary of Russia’s Sberbank, as well as two other subsidiaries that are under its supervision “are in danger of failing or could fail” as a sign of the consequences of the recent sanctions imposed on Russia.
The ECB stated that it occurred “owing to a decline in their liquidity condition,” and Austria’s Financial Market Authority said it put a moratorium for Sberbank Europe, located in Austria.
In addition, Deutsche Boerse, the German stock exchange operator, announced that it would stop trading several securities of Russian issuers immediately. This list comprises VTB Bank and Sberbank.
These two developments are part of the responses of European finance to the threat of sanctions and other measures as a retaliation to the Russian invasion in Ukraine.
Over the weekend, Banks and lawyers were scrambling to determine the effect on their businesses of a new round of sanctions and the removal of major Russian banking institutions from major international payments network SWIFT on their business.
Central banks’ shares fell like that of the European banking sector, falling 4.3 percent, more than the 1.9 percent drop in the Euro Stoxx index.
The market turmoil began when Russian invaders seized two small cities in the southeastern region of Ukraine and the region surrounding a nuclear power station as Moscow’s diplomatic and economic isolation grew.
The banks that have essential operations in Russia were the most severely hit. In Austria, Raiffeisen Bank International fell 18 percent as it claimed it was working to mitigate the effects of sanctions.
Societe Generale lost 6.9% Societe Generale lost 6.9%, while UniCredit was down 8%.
Deutsche Bank, a German institution Deutsche Bank, which opened the newly constructed Moscow office in December, saw its share of the market drop by 7%.
“We agree with the actions made by the German government and its allies and will always apply these sanctions,” Deutsche Bank said in the statement.
The ECB’s caution extended the warning to Sberbank subsidiary companies located in Croatia and Slovenia. The majority of Russia owns Sberbank.
The lender noted in a statement that some of its subsidiaries had seen “significant departures from client deposits in a concise amount of period” and was in constant communication with regulatory authorities.