5 Apr 2022 14:57

Kostin says VTB assets in Europe frozen, hasn't heard of their sale

MOSCOW. April 5 (Interfax) - VTB head Andrei Kostin has said that he has heard nothing about the bank's European subsidiary being sold.

"But how, they've frozen everything for now, there's no sale at the moment, I haven't heard about that," Kostin told journalists.

Bloomberg reported in March, citing sources, that VTB's European subsidiary had been put up for sale after its parent bank came under U.S. and UK sanctions.

According to VTB's sources, German regulatory bodies are in favor of the bank being sold, as they hope to avoid turmoil in VTB Bank Europe. Although selling is not the only option, a sale could be agreed quickly, sources said.

The authorities, including banking regulator BaFin and Germany's central bank, Deutsche Bundesbank, are trying to avoid the country's deposit insurance having to step in and burden the sector with higher costs. Sanctions against Russian banks have already led to Sberbank's European subsidiary closing.

VTB and German regulators are trying to structure a deal so that the buyer does not risk violating sanctions. Another option being discussed is exchanging Russian and European assets with the parent company, although that may be complicated, taking into account that VTB has been sanctioned, sources said.

Bloomberg reported earlier in March that the German authorities were pushing VTB Bank Europe to sell individual assets in order to make sure that liquid funds are sufficient to meet deposit withdrawals.

VTB Bank Europe had assets of 7.95 billion euros at the end of September 2021, making it a comparatively smaller lender in the region. Around 1.64 billion euros of these assets were in cash and short-term funds, and there are 4.35 billion euros in customer deposits among its liabilities.

All the same, even a small bank failing can cause turbulence in the sector, and selling a bank is often less complicated than phasing it out, Bloomberg said.

VTB finished transferring its European units in Germany, Austria, and France to one banking license at the beginning of 2018, with the united structure operating under the name VTB Bank (Europe) SE and a head office in Frankfurt. VTB Bank (Europe) SE also includes an online retail platform in Germany, VTB Direktbank.

VTB Bank Europe said at the beginning of March that it was not affected by EU restrictions. The bank said that it was closely consulting with BaFin and assessing the impact of the measures introduced in response to the situation in Ukraine. It said that its economic situation was stable.