On a mixed day for U.S. markets, the Sberbank of Russia (OTCMKTS:SBRCY) plummeted. Indeed, SBRCY stock closed down nearly 72% today. So what is behind the losses for Russia’s largest bank?
Well, this morning, the European Central Bank (ECB) warned of liquidity issues related to Sberbank in the wake of Russia’s invasion of Ukraine. Specifically, it seems account holders are withdrawing their money en masse. The ECB commented on the quickly evolving situation:
“Sberbank Europe AG and its subsidiaries experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions. This led to a deterioration of its liquidity position. And there are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”
In other words, the ECB believes the bank’s branches in Europe are likely to fail. So what else do you need to know about the situation?
SBRCY Stock Falls to New Low Amidst European Bank Run
This week’s European banking turmoil likely comes in response to the latest sanctions against Russia. The United States and the European Union have levied sanctions on Russia’s largest banks, including Sberbank. Over the weekend, investors also learned that global leaders were willing to block certain banks from the international SWIFT banking system.
Branches of Sberbank across Europe are in variously dire states. Several European countries have imposed limits on withdrawals, while others, like Hungary, have ordered holidays for the bank. The Czech Republic went so far as to initiate the process to revoke Sberbank’s banking license.
SBRCY stock has responded poorly to this news. From 52-week highs above $20, shares have plunged to $1.25 after the latest declines. Read more about SBRCY here.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
