Sberbank intends to gradually reduce funding for its subsidiary banks in Europe, reported with reference to one of the draft anti-crisis plan of the state bank on Wednesday, March 4. the Vedomosti newspaper

The document states that by July 1, the bank will also determine which of its subsidiaries to sell, and by mid-March it will present proposals to reduce the costs of these banks, including on employees and real estate. The publication clarifies that in fact this means that the state bank will stop financing European subsidiaries and will wait for them to return funding for previous years.

A representative of Sberbank Europe suggested that Vedomosti contact Sberbank for comments. The state bank reported that the business model in Europe is being finalized in order to achieve a stable, profitable, self-funded banking group.

According to estimates by the international rating agency Fitch, Sberbank allocated €1.4 billion to fund Sberbank Europe as of the third quarter of 2013. The amount has remained virtually unchanged since then, one of the bank’s counterparties told the newspaper. Sberbank wants to receive most of this money in 2015, another source told Vedomosti.

Sberbank operates in nine European countries: Sberbank Europe AG (formerly Volksbank International AG, which it bought in 2012 for €505 million) manages subsidiary banks in Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Germany and Ukraine. At the end of February, the Lidovky publication, citing its sources, reported that Sberbank was preparing to sell its subsidiaries in Hungary and Slovakia. The newspaper's interlocutors clarified that the decision was caused by a “cold conflict” between the West and the Kremlin.

At the end of July 2014, Sberbank came under EU sanctions. The EU has prohibited investors from directly or indirectly purchasing, selling or facilitating the purchase or sale of Eurobonds, shares or other financial instruments with a maturity of up to 90 days issued by these banks. In October of the same year, the bank appealed to the European Court of Justice with a demand to overturn the EU decision to impose Russia-related sanctions against the bank.

In September 2014, Sberbank’s access to debt financing was also limited by the United States. Switzerland introduced similar sanctions. Then the head of the bank, German Gref, said that the bank was experiencing problems with foreign exchange liquidity. “[Foreign] markets are de facto already closed—it is no longer possible to actually attract financing until three months or thirty days,” he said.

Sberbank will stop financing European subsidiaries