By Tom Sims and Alexandra Schwarz-Goerlich
FRANKFURT (Reuters) -The European Central Bank on Monday warned that Sberbank Europe, a subsidiary of Russia’s Sberbank, and two other subsidiaries under its watch “are failing or likely to fail”, in an indication of the fallout of the latest sanctions on Russia.
The ECB said it was “owing to a deterioration of their liquidity situation”, while Austria’s Financial Market Authority said it imposed a moratorium on Sberbank Europe, which is based in the country.
Separately, Deutsche Boerse, the German stock exchange operator, said that it was suspending from trading a number of securities from Russian issuers with immediate effect. The list includes VTB Bank and Sberbank.
The two developments are among the reactions by European finance to sanctions and other measures in retaliation for Russia’s invasion of Ukraine.
Over the weekend, banks and their lawyers scrambled to discern the impact of a fresh wave of sanctions and the banishment of big Russian banks from the main global payments system SWIFT on their businesses.
Shares of leading banks sank with the European banking sector fell 4.3%, steeper than a 1.9% fall for the Euro Stoxx index.
The market turmoil came as Russian invasion forces seized two small cities in southeastern Ukraine and the area around a nuclear power plant, as Moscow’s diplomatic and economic isolation deepened.
The banks with significant operations in Russia were hit the hardest. Austria’s Raiffeisen Bank International fell 18% as it said it was working through the impact of sanctions.
Societe Generale lost 6.9%, and UniCredit was 8% lower.
Germany’s Deutsche Bank, which opened a new Moscow headquarters in December, was down 7%.
“We support the decisions of the German government and its allies and will consistently implement the sanctions,” Deutsche Bank said in a statement.
The ECB’s warning extended to Sberbank subsidiaries in Croatia and Slovenia. Sberbank is majority owned by Russia.
The lender said in a statement that several of its subsidiaries saw “significant outflow of client deposits within a very short time” and that it was in close contact with regulators.
Meanwhile, the Russian securities dropped by Deutsche Boerse also include Lukoil and Aeroflot.
(Reporting by Tom Sims, Alexandra Schwarz-Goerlich; Frank Siebelt; Editing by Zuzanna Szymanska, John O’Donnell and Philippa Fletcher)