FRANKFURT - The European subsidiary of Russia's state-owned Sberbank is facing bankruptcy, the European Central Bank said Monday, in the wake of sanctions aimed at punishing Moscow for its invasion of Ukraine.
Sberbank Europe AG, headquartered in Austria and with branches in Croatia and Slovenia, has "experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions", the ECB said.
"The European Central Bank (ECB) has assessed that Sberbank Europe AG and its two subsidiaries in the banking union, Sberbank d.d. in Croatia and Sberbank banka d.d. in Slovenia, are failing or likely to fail owing to a deterioration of their liquidity situation," the ECB said in a statement.
"The bank is likely to be unable to pay its debts or other liabilities as they fall due," it added.
The two largest Russian banks, Sberbank and VTB, were targeted Thursday by tough US sanctions aimed at limiting their ability to conduct business internationally.
The sanctions were stepped up over the weekend with the announcement that selected banks would be expelled from the international SWIFT payment system.
Sberbank Europe AG -- which is 100 percent owned by the bank's Russian parent company -- also has subsidiaries in Bosnia and Herzegovina, the Czech Republic, Hungary and Serbia, which do not come under the jurisdiction of the ECB.
The ECB said it has "coordinated with national competent authorities" in those countries.