the second Russian bank loses control of its European subsidiary

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The management of the European entity is now prohibited from “following directives” from the Russian establishment, added on Friday to the list of entities sanctioned by the EU.

The German banking regulator announced on Sunday that it had withdrawn from the second largest Russian bank VTB, targeted by sanctions because of the war in Ukraine, control of its European subsidiary, whose activities can nevertheless continue.

The Russian group “no longer has control” over VTB Bank SE, a subsidiary based in Germany, after “the ban on the exercise of voting rights”, explains the financial market authority BaFin in a press release.

The management of the European entity is now prohibited from “following directives” from the Russian establishment, added on Friday to the list of entities sanctioned by the EU.

A ban on the transfer of funds to “entities of the VTB group” has been in force for “several weeks”, specifies the BaFin.

VTB “can no longer dispose of the financial assets” of its European subsidiary, which is thus “entirely isolated” from the Russian group, according to the regulator.

Already excluded from the Swift network

The establishment was already targeted by American sanctions and was excluded from the Swift international financial system.

The first Russian bank, Sberbank, has been sanctioned since February and bankruptcy proceedings will be opened for its European subsidiary Sberbank Europe AG, based in Austria and facing serious cash flow problems.

For VTB, “the operational situation remains unchanged,” said BaFin on Sunday. “Clients can always freely dispose of their deposits.”

No liquidity problem has been identified by the regulator, which says it is monitoring the situation closely.

However, according to the daily Handelsblatt, four of the five members of the management board have recently resigned and VTB Europe has not taken on new customers since the beginning of March.

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