Western companies pull out of Russia; sanctions-struck Sberbank leaves EU
The EU subsidiary of Russia’s largest bank, Sberbank, has been forced out of the European Union, after a run on deposits spurred by sanctions.
Sberbank was sanctioned by the UK’s Office of Financial Sanctions Implementation (‘OFSI’) on 1 March. In late February, transactions with the bank were restricted by measures taken by the US Treasury.
On 28 February, Sonja Sarközi, CEO of Sberbank Europe said, ‘In the light of the latest geopolitical developments, several banks of Sberbank Europe Group registered significant outflow of client deposits within a very short time. In some subsidiary banks, this resulted in long waiting times in branches and partially in restricting the amount of daily cash withdrawals. In order to protect its customers and the bank’s critical functions, Sberbank Europe has been and is in close contact with the competent regulatory authorities. We are making every effort to support the authorities to apply their powers to resolve this unprecedented situation in the interest of our customers.’
It is reported that the bank’s Austrian branch will enter ‘normal insolvency proceedings’, and others sold to local banks.
Severing ties
Meanwhile, a number of high-profile western companies, anticipating potential sanctions restrictions and reputation issues, or simply acting on their morals, are severing ties with the Russian market. Boeing, Airbus, ExxonMobil, BP, Shell, Mastercard, Visa and others have all announced that they have suspended all or part of their involvements with Russian parties.
Global energy company, ExxonMobil announced, 1 March, that the company ‘supports the people of Ukraine as they seek to defend their freedom and determine their own future as a nation. We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people. We are deeply saddened by the loss of innocent lives and support the strong international response. We are fully complying with all sanctions.’
It added, ‘ExxonMobil operates the Sakhalin-1 project on behalf of an international consortium of Japanese, Indian and Russian companies. In response to recent events, we are beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture. As operator of Sakhalin-1, we have an obligation to ensure the safety of people, protection of the environment and integrity of operations. Our role as operator goes beyond an equity investment. The process to discontinue operations will need to be carefully managed and closely coordinated with the co-venturers in order to ensure it is executed safely.’ The company went on to conclude, ‘Given the current situation, ExxonMobil will not invest in new developments in Russia.’
Also in a 1 March statement, financial services organisation, Mastercard said, ‘Our first priority has been the well-being of our employees and their families. Our teams are working around the clock to help secure their safety, using all the resources at our disposal. We will keep our employees in mind throughout the region as we navigate through this crisis.
‘As a result of sanction orders, we have blocked multiple financial institutions from the Mastercard payment network. We will continue to work with regulators in the days ahead to abide fully by our compliance obligations as they evolve.’
