Czech National Bank revoking Sberbank CZ’s banking license

Those who do their banking at Sberbank cannot currently access their accounts, but the Czech National Bank (ČNB) assures the Czech clients of the Russian daughter company that their Sberbank deposits are insured for up to EUR 100,000 per client (around CZK 2.5 million).

Sberbank CZ has restricted all card transactions and suspended internet banking. The bank had long lines on Friday, Feb. 25, and then closed early for what the bank described as “security reasons.” Branches did not open today.

“I am very sorry for the situation facing our clients, business partners, and employees now. Unfortunately, despite close cooperation with our shareholder, we have not been able to continue to provide services to our clients in full,” Marijana Vasilescu, chairman of the Board of Directors and CEO of Sberbank CZ, said in an announcement on the bank’s website.

“Together with our employees, we make every effort to overcome the consequences of the current geopolitical situation and find the most acceptable solution for all our clients as soon as possible. … We have also informed the ČNB and we work closely with it,” Marijana Vasilescu, chairman of the Board of Directors and CEO of Sberbank CZ, said in an announcement on the bank’s website.

The Czech National Bank, though, has no confidence that the bank’s liquidity situation can be resolved. The ČNB has announced that it has launched steps toward revoking Sberbank CZ’s banking license due to its poor liquidity.

ČNB has also issued a preliminary measure preventing the bank from disposing of assets and liabilities, including accepting deposits and providing loans. The ČNB says the closure will not affect the stability of the Czech financial sector.

“The Czech National Bank has been intensively addressing the situation regarding Sberbank CZ since the very start and is doing its utmost to minimize the impacts of the bank’s problems on its clients,” ČNB Governor Jiří Rusnok said.

People who have accounts at Sberbank CZ have some legal protection. Deposits are insured up to EUR 100,000 per client (around CZK 2.5 million).

Some other conditions apply for accounts of municipal and regional entities, but these do not concern individual depositors.

The compensation for depositors will be organized by the Financial Market Guarantee System through a financial institution it designates. By law, payouts will start no later than seven business days after the FMGS receives written notification from ČNB that a failing bank is unable to meet its commitments.

“The Financial Market Guarantee System is ready to commence the payout of compensation of insured deposits in accordance with the law of up to EUR 100,000 per client as soon as it receives the relevant notification from the Czech National Bank,” Renáta Kadlecová, managing director of the Financial Market Guarantee System, said.

ČNB stated that the Financial Market Guarantee System now has CZK 35 billion at its disposal to cover the insured deposits.

The ČNB is cooperating on a European level with the Single Resolution Board (SRB), a European entity that oversees banks that are part of international financial groups. The SRB today issued a 24-hour moratorium on the activities of the Sberbank Europe AG subsidiaries operating in Austria, Slovenia, and Croatia due to the bank’s likelihood to fail. Sberbank Europe AG is part of Sberbank group, but separate from Sberbank CZ.

The Ministry of Labor and Social Affairs said it was seeking ways to send pensions, benefits, and allocations to people with accounts at Sberbank, minister Marian Jurečka tweeted today.

“We are dealing with parent's benefits, pensions and allowances to be paid to Sberbank clients, we have to bring the money to people rapidly,” Jurečka said.

A concrete procedure is being prepared. Employment offices and the Social Security Administration send several thousand payments a month to people with accounts at Sberbank.