A wave of withdrawals left the Russian bank without liquidity. Sberbank shares plunged up to 50% in the market.
Another face of Russia’s war with Ukraine got manifested in the economic sphere: now, the European subsidiary of Sberbank, the Russian central bank, is the one most affected. According to the European Central Bank (ECB) statements, Sberbank Europe AG would be in “bankruptcy or probable bankruptcy.”
The situation of the banking entity could be a consequence of a massive wave of withdrawals of funds from its clients amid geopolitical tensions. This situation would have caused a lack of liquidity that could not get reversed, preventing the institution from meeting its obligations.
The France24 news agency quoted the ECB’s banking supervision division saying that the bank would be unable to pay its debts or get rid of other responsibilities shortly. The European financial authority considers no positive prospects with “realistic possibilities” for the institution to restore its cash flow.
Meanwhile, the shares of Sberbank (SBER) plummeted more than 50% during the day this Sunday, February 27. This Monday, SBER has presented a slight recovery in the markets early this Monday.
However, slight recoveries look unrepresentative when it comes to a weekly context, down over 4% and down 47% over the past two 7-day periods, in TradingView data.
The Blockade of Russia
Previously, Russian banking entities would face exclusion from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the leading interbank trade network worldwide.
Meanwhile, citizens from both sides desperately try to get their hands on money. Just as the Russians have chosen to withdraw their funds from Sberbank, on the Ukrainian side, there have been very long lines to withdraw cash from ATMs, amid a blockade on transactions with electronic money, as we reviewed in CriptoNoticias.
The Russian currency, the ruble, and the Ukrainian hryvnia have been equally affected in the foreign exchange markets. In both cases, the exchange rate against the dollar and euro has skyrocketed, although the one that comes out worst at the moment is the ruble.
The Central Bank of Ukraine developed a resolution to obstruct the foreign exchange market and movements with electronic money and limit the cash withdrawal of their internal currency. The procedure is one policy that comes together with the Martial Law declared after the armed attacks by Russia on many regions of that country.
By: Jenson Nuñez
