Despite widespread fears that London will lose its standing as the world’s financial capital, Russia’s largest lender Sberbank is doubling down on its UK presence by committing just over €45 million to its British subsidiary, business news outlet BNE reported Monday.
The €45 million injection by the parent company more than doubles the capital of Sberbank CIB, which has struggled with other Russian lenders since being sanctioned by the US, UK and EU after Moscow’s invasion of Ukraine in 2014. Banks with ties to the Kremlin are barred from raising capital with a maturity of over 30 days in European markets.
The move comes as somewhat of a reversal of Sberbank’s recent attempts to divulge itself of its holdings outside of Russia. After acquiring Turkey’s Denizbank in 2012 for €2.8 billion, Sberbank is now looking to offload the Turkish lender to Dubai-based banking group Emirates NBD.
Sberbank is also in the process of selling 99.9% of its shares in Lviv-based VS Bank, its subsidiary in Ukraine, to pro-Russian Ukrainian oligarch and former National Bank of Ukraine governor, Sergey Tigipko.
The head of Sberbank, German Gref, has publicly stated that the West’s sanctions on Russia over the war in eastern Ukraine may force the Kremlin-linked lender to sell most of its European subsidiaries, all of which have struggled to cope with the harsh financing restrictions.
According to Gref, who previously served as Russia’s economy minister under President Vladimir Putin, Sberbank will likely sell all of its other foreign banks except for its flagship subsidiaries in Belarus and Kazakhstan.
Sberbank currently controls 46% of Russia’s deposits and more than a third of the nation’s loans. The bank saw its losses quadruple in 2014 as sanctions imposed over Russia’s annexation of Crimea took their toll.
The bank suffered an addition setback in April 2015 when a UK court awarded former equity salesperson, Sveltana Lokhova €3.6 million in compensation after the court ruled that she had been continuously sexually harassed and repeatedly discriminated against by her Sberbank colleagues.
The most recent injection of cash into its UK subsidiary is the largest in Sberbank’s history, dwarfing the parent’s far smaller capital injections of €6.1 million in 2016 and €3.3 million the previous year. Sberbank CIB’s reported aggregate capital now stands at €83.7 million.
Sberbank is not the only Russian bank to continue hedging its bets on London’s prime position in the post-Brexit financial world. Russia’s second-largest lender, VTB Bank, has continued to bolster its presence in the UK at a time when its Western counterparts search for new bases of operations in the European Union.