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The European arm of Russia’s VTB Bank could face closure as the US and its allies continue to sanction Russia following its invasion of Ukraine, Reuters reported citing people familiar with the matter.
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German regulators could shutter VTB’s European operation within days, a source with direct knowledge of the matter told the news agency.
VTB Bank is Russia’s second-largest lender and outside Russia, the bank’s primary operation is in Germany.
Germany’s financial regulator BaFin is closely monitoring the situation and is ready to act if required but a final decision is yet to be made, a second source said.
A spokesperson for Germany’s Bundesbank stated that it was in contact with BaFin in this regard without commenting on a specific Russian bank operating in Germany.
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By GlobalData“If necessary, we will take the appropriate measures,” the spokesperson noted.
The news comes after the European Central Bank’s Single Resolution Board (SRB) revealed plans to start insolvency proceedings for Sberbank Europe AG.
SRB also announced that Sberbank d.d. in Croatia will be sold to Hrvatska Poštanska Banka and Nova ljubljanskabankad.d. will buy assets of Sberbank Banka d.d. in Slovenia.
The US and its allies have imposed several sanctions targeting Russia’s financial system to oppose its invasion of Ukraine.
The sanctions have particularly affected VTB Bank. Most recently, it was included in the European Union’s list of Russian banks that will be cut off from the global payments messaging system SWIFT.
The Russian government-backed lender is said to have €4bn in deposits in Europe.
BaFin stated that VTB’s customers were able to access their money and it is not onboarding any new customers.
Furthermore, customers’ deposits in VTB Bank are covered by Berlin’s deposit protection scheme for up to €100,000.
VTB Bank’s position is like Sberbank’s because both of them were sanctioned and have faced reputational damage in Europe, an EU official told the news agency.
