Frankfurt, June 29th 2022
The critical situation in which VTB Bank Europe SE (VTBE) in Frankfurt found itself immediately after Russia’s invasion of Ukraine has been successfully overcome in recent weeks by the newly appointed management. “The bank’s liquidity situation is stable, and we have been able to cope with the strong outflows of deposits resulting from timely terminations of call money and fixed-term deposit accounts without insurmountable problems,” says CEO Frank Hellwig, who was appointed as special representative of the German Federal Financial Supervisory Authority (BaFin) in April. Overall, customer deposits at VTBE have fallen from 4.1 billion Euro at year-end 2021 to 2.4 billion Euro at the end of May 2022. “The confusion caused by individual banks refusing to accept deposits from our savers that were paid out to them by VTBE, for fear that they might violate sanctions by doing so, has also been almost completely eliminated.”
In a few cases, this led to unpleasant delays in the disbursement of credit balances from call money or fixed-term deposit accounts, for which VTBE was not responsible. In some cases, disbursed customer funds were transferred back to VTBE by the correspondent banks, but in others they were frozen there and not paid out immediately to the entitled recipients. By now, however, market participants have largely come to the conclusion that VTBE is not a bank sanctioned in Europe. This has also been stated explicitly once again by the Bundesbank. Moreover, the parent company in Russia, PJSC VTB Bank, headquartered in St. Petersburg, has now had its voting rights for VTBE revoked. The management of VTBE in Frankfurt is not allowed to take instructions from Russia, the Supervisory Board has been reconstituted, and all representatives of the Russian parent company have left it.
On the credit side, the situation has also calmed down to a large extent. “There were some individual customers or agents who stopped or withheld interest and redemption payments due to us because of the sanctions against the Russian parent company,” says CFO Miro Zadro, “but the strong commitment of our employees, who phoned after every loan that was due and in some cases found very creative solutions for the repayments, made it possible to keep the volume of overdue payments under control. As things stand, we are not currently experiencing a worrying increase in overdue payments. VTBE remains very well funded with capital and cash reserves to continue to meet all regulatory obligations.“