Russian banks: Sberbank’s bankruptcy averted – what investors need to know

severe liquidity problems

After the West immediately imposed financial sanctions in response to the war against Ukraine, Sberbank – the largest bank in Russia, which is largely controlled by the Russian state – was immediately hit. First, the responsible Austrian Financial Market Authority (FMA) froze the funds as part of its freeze. Two days later, the EU Banking Association’s Single Decision Board (SRB) announced that its Austrian-based subsidiary, Sberbank Europe AG, would go bankrupt. But this has now been avoided. “The bankruptcy of Sberbank Europe AG can be avoided and thus enables an orderly solution to the bank,” the FMA said.

Treatment at the end of the year

The Austrian Deposit Insurance Authority, which has already paid 926 million euros in guaranteed deposits, has announced that it will take back all the money. According to the FMA, it can also “provide services to all other creditors in a timely manner in accordance with the sanctions regime.” Banking should be completed by the end of the year. This means that anyone who invested more than 100,000 euros covered by the deposit insurance of Sberbank will also get this amount back. The bank announced that in addition to the maximum security amount of 100,000 euros per customer, “all remaining savings deposits will also be paid in full to our customers.”

Deposit protection up to 100,000 euros

However, savers of Sberbank Europe did not have to worry much anyway, because their deposits were protected. Austrian deposit insurance was crucial to this, because Sberbank Europe AG is a member of the Austrian deposit insurance. According to the Austrian supervisory authority, in such a case, investors must be compensated for the covered amount “within ten working days after a security event” – up to €100,000. Protection includes balances in checking accounts, payroll accounts, student accounts, and pension accounts, or deposits in savings and savings accounts. Investors were compensated accordingly.

What do you do for savers?

The German Bank’s Compensation Program (EdB) was responsible for the technical handling of the compensation procedure for German clients, and contacted the German investors involved. The savers did not have to file a specific report, but were informed. The security vaults of the Economic Development Bank are financed by annual contributions from member banks. If there is not enough money, institutions can levy private contributions from member banks and obtain loans.

Up to €500,000 safe

In some cases, according to the Austrian Deposit Insurance, applications can be submitted within twelve months for repayment of balances over the maximum amount – up to a total of 500,000 euros. To do this, it must be demonstrated that the contribution came from the sale of privately used property or is based on insurance payments or compensation payments for bodily injury resulting from criminal offenses. More detailed information is available from Austrian Deposit Insurance. (https://www.einlagensicherung.at/einlagen.php).

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