European bank shares slide further; Russia’s Sberbank exits Europe By Reuters

FRANKFURT (Reuters) – European banks opened lower on Wednesday after two days of steep losses as the crisis in Ukraine drags on, and after the European arm of Russia’s Sberbank was forced to close.

An index of leading European bank stocks fell 2.2% early on Wednesday, after dropping 5.6% on Tuesday and 4.5% on Monday to hit its lowest level since April, down 27% from last month’s highs.

Wednesday’s trading comes against a backdrop of Russia showing no intention of stopping its assault, as U.S. President Joe Biden warned Vladimir Putin that the Russian leader “has no idea what’s coming”. Russia calls its actions in Ukraine a “special operation”.

Among the heaviest hit bank shares so far this week is Austria’s Raiffeisen Bank International, which is also looking into leaving Russia, two people with knowledge of the matter told Reuters, a move that would make it the first European bank to do so since Moscow’s invasion of Ukraine.

Raiffeisen shares were down 5.6% at market open.

ING also started 4.8% lower and Societe Generale (OTC:) lost 2.4%. Both have a presence in Russia.

Overnight, the European arm of Sberbank, Russia’s biggest lender, was closed by order of the European Central Bank, which had warned it faced failure due to a run on deposits after Russia invaded Ukraine, Austria’s Financial Market Authority said.

Sberbank, which reported record profits in 2021, said that it was leaving the European market as its subsidiaries there faced large cash outflows and threats to the safety of employees and property.

Sberbank operated in Austria, Croatia, Germany and Hungary, among other nations, and had European assets worth 13 billion euros ($14.41 billion) on Dec. 31, 2020.

On Tuesday, Russia said it was placing temporary restrictions on foreigners seeking to exit Russia assets, as it tried to stem an investor retreat driven by crippling Western sanctions imposed over the invasion of Ukraine.

Banks are scrambling to keep up with the situation.

France’s BNP Paribas (OTC:) said it was working to maintain its activities as much as possible at its Ukraine arm Ukrsibbank, which has close to 5,000 employees.

A task force at Germany’s Commerzbank (DE:), which has a subsidiary in Russia, is meeting multiple times a day, a board member has said.

($1 = 0.9022 euros)