Russia’s No.1 lender Sberbank pulls out of Europe

Russia’s largest lender Sberbank SBER.MM said on Wednesday it was quitting almost all European markets, blaming big cash outflows and threats to its staff and property following Russia’s invasion of Ukraine and Western sanctions.

The news came as the state-controlled bank reported record annual profits for 2021.

The bank said it was no longer able to supply liquidity to European subsidiaries, following a central bank order, but its capital level and asset quality were sufficient to pay all depositors.

“In the current situation, Sberbank has decided to leave the European market,” it said in a statement. “The group’s subsidiary banks have faced abnormal cash outflows and threats to the safety of its employees and branches.”

Unprecedented steps by Western nations to isolate Russia’s economy and financial system over its invasion of Ukraine include sanctions on its central bank and the exclusion of some of its lenders from global payments system SWIFT.

The European Central Bank (ECB) had already ordered the closure of Sberbank’s European arm, after warning it faced failure because of a run on its deposits sparked by the backlash to the invasion, which Moscow calls a “special operation.”

Sberbank, which had operations in Austria, Croatia, Germany and Hungary among other nations, had European assets worth 13 billion euros ($14.4 billion)as of Dec. 31, 2020.

Slovenian bank NLB NLBR.LJ said it was acquiring Sberbank’s Slovenian unit.

The exit does not affect the bank’s operations in Switzerland.

Sberbank’s net profit for 2021 jumped 64% year on year to 1.25 trillion roubles ($12.38 billion). Return on equity for the year was 24.2% and its net interest income stood at 1.8 trillion roubles.

The Moscow Exchange has halted trading on stocks and sought to prevent capital outflows from Russian assets, but Sberbank’s depositary receipts in London SBNCyq.L have lost their entire value, falling to $0.