Today, ECB rated Sberbank Europe AG in Austria and its two subsidiaries in Croatia and Slovenia likely to default. Sberbank Europe AG is a subsidiary group of Sberbank of Russia, which has full ownership of the Group.

The valuation of the Group was passed after deposit outflow which is a direct result of geopolitical tension due to the Russian invasion of Ukraine. We should note that each deposit (up to EUR 100k) is protected with the national insurer of deposit – the Croatian Deposit insurance agency for Croatia. The outflow of deposits worsened the liquidity position of the Group, and ECB states there is no realistic expectations to improve Group’s and its subsidiary’s financial position.

Due to the mentioned outflow, Single Resolution Board, as central resolution authority within the Banking Union, decided on the moratorium for Sberbank which will last for two days. Meanwhile, citizens and companies are free to dispose daily deposits up to c. EUR 1k. Croatian National Bank also highlighted that more than 90% of all depositors are protected with deposit insurance.

We also highlight that Russia’s central bank raised its key interest rate to 20% (from 9.5%) to compensate for the increased depreciation and inflation risk after the country was hit by powerful new Western sanctions over the weekend. Early Monday, the Russian ruble plunged around 33% to 120.64 rubles to the euro from around 90.8 from the beginning of last week.