The failure of Sberbank cost Austrian banks 913 million euros

Due to the Deposit Protection and Investor Compensation Act (ESAEG), customer deposits up to €100,000 per person are protected by Einlagensicherung Austria (ESA). Sberbank Europe’s approximately 35,000 clients are exclusively German private clients.

The fact that this time not only ESA, but all banks in Austria are responsible for secured deposits of Sberbank is due to the fact that Sberbank Europe belongs to the so-called “separate accounting group”. However, the European Space Agency is responsible for the operational implementation.

According to the head of the European Space Agency, Stefan Tack, the amount to be paid by individual guarantee systems is caused by “covered deposits of the respective member institutions as of December 31, 2021”. From this, an approximate burden distribution of 40 percent for the ESA, 36 percent for Raiffeisen and 24 percent for savings banks can be derived, Taki tells APA.

According to this section, the ESA will have to pay about 365 million euros, the Raiffeisen group security system will have to pay about 273 million euros and the savings bank group will have to pay about 219 million euros. In order to be able to determine exactly which contributions are necessary, one has to wait for the full data from Sberbank Europe.

According to the law, payment must be made within 10 days. “In the next few days, all depositors will receive a letter from EdB (German Banks Compensation Scheme, note) explaining the additional steps needed,” says the ESA. For about 120 Austrian depositors – all of whom are corporate clients – the compensation procedure will be handled directly. “You can apply next week and we can see from the other examples given that it has always worked very quickly and quickly,” said ESA Supervisory Board Chairman Franz Rudorfer, at ORF’s Ö1-Mittagsjournal.

Although German clients are almost exclusively affected by the failure of Sberbank Europe, German deposit insurance, and the German Banks Compensation Scheme (EdB), will make no contribution. “Sberbank Europe AG is an Austrian bank headquartered in Vienna. This means that the European Space Agency (ESA) is solely responsible for the compensation, which receives financial resources for it from all Austrian banks,” says Tack.

Also, it will not be possible to recover the funds from the Economic Development Bank after payment. However, it is possible, according to current information, that “the ESA will recover most of the money it has now used to compensate through insolvency proceedings.”

According to financial experts, Sberbank Europe should now quickly slide into bankruptcy after the actions of the FMA. The government commissioner appointed by the FMA as supervisor must now determine whether the insolvency offense has been fulfilled and, if so, when it has been fulfilled.

Sberbank Europe was active not only in Austria and Germany, but also in Croatia, the Czech Republic, Hungary, Slovenia, Serbia and Bosnia and Herzegovina. However, as Russia’s Sberbank announced on Wednesday, the bank now wants to completely withdraw from Europe in light of the situation.

A solution has already been found for some countries. Thus, Sberbank in Slovenia was bought by the largest bank in the country, NLB. The Croatian subsidiary bank was taken over by the state post bank, Hrvatska Postanska Banka (HPB). In Serbia, the Serbian Central Bank on Tuesday approved the acquisition announced in the fall by the Serbian AIK Bank, which belongs to the MK Group of Miodrag Kostic.

“Today’s decisions mean that these two banks will open as usual on Wednesday 2 March and will continue to serve their customers without interruption,” the EU Commission in Brussels said. This will ensure the maintenance of financial stability in Croatia and Slovenia and the protection of depositors.

However, in the Czech Republic, the local National Bank (CNB) began the procedure for withdrawing the license at Sberbank CZ on Monday. As in Austria, bankruptcy can also be imminent for Sberbank in the Czech Republic. The fate of the branches of Sberbank in Hungary and Bosnia and Herzegovina is still unclear.