Russian lender Sberbank is closing its investment arm in London after sanctions caused the investment arm to cease operating. The British financial watchdog said the decision was due to the fact that the company’s assets were insufficient to cover its liabilities. The FCA has appointed joint special administrators to oversee the bank’s assessment of its client money and custody assets. The lenders hope to return client money and custody assets to clients as quickly as possible.
According to Sky News, Sberbank, which controls the largest bank in Russia, is closing its London investment arm. The parent company has been sanctioned, but the London branch has remained in business. The lender has not yet said whether it will continue to operate in the U.K. unit of Sberbank has not been affected, but the lender has been cut off from the U.S. financial system.
The U.K. branch of the Russian lender has been closed, as has the London investment arm. In response, the government of Ukraine tightened foreign exchange restrictions, meaning the value of the rouble cannot be determined by supply and demand. The rouble’s value has fallen sharply in recent weeks, reflected in emerging black market activity. This is further evidence of the rouble’s weakness as a financial instrument. The United States has also cut off payments from Russian banks, resulting in a global recession and economic downturn.
Sberbank’s London investment arm, known as Sberbank CIB, will be shut down as part of a restructuring effort. It is one of the largest Russian lenders and has a controlling stake in the company. Despite its international reputation, the London branch of Sberbank PJSC is not sanctioned, but its parent has been cut off from the U.S. financial system.
In the meantime, the London branch of Sberbank has suspended its investment arm in London after the insolvency of its U.K. unit. Sberbank’s U.K. investment arm has been a vital part of the Russian economy. It was the biggest lender in Europe and the second-largest in the world, according to the UN. The government’s tightened foreign exchange restrictions are forcing the country to reduce its dependence on the rouble.
After a year-long investigation into the bank’s finances, the European Union has imposed new sanctions on the company. The Sberbank of Russia’s CIB is now the largest lender in the world, and its parent company is isolated from the U.S. financial system. The EU is now threatening to impose new financial sanctions on its London investment arm, saying that it will not tolerate any such action.