December 7, 2018 / 11:54 AM / 9 months ago

Russia's sanctions-hit Sberbank, VEB winding down business in Ukraine: central bank

KIEV (Reuters) - The Ukrainian subsidiaries of the Russian banks Sberbank and VEB - under sanction, unable to take on new business and legally barred from transferring assets out of Ukraine — appear to be winding down their operations, the head of Ukraine’s central bank said.

FILE PHOTO: Ukraine's Central Bank Governor Yakiv Smoliy speaks during an interview with Reuters in Kiev, Ukraine December 5, 2018. REUTERS/Valentyn Ogirenko/File Photo

Ukraine imposed sanctions on Russian banks amid fighting in eastern Ukraine and Russia’s annexation of Crimea in 2014. In September, a Ukrainian court froze the subsidiaries’ assets and shares, after Ukrainian companies won a claim for compensation for assets lost from the annexation.

“Russian banks are under sanctions,” Yakiv Smoliy told Reuters in an interview. “There is a ban for them on transferring assets outside Ukraine to the parent structures.”

    Asked if the banks were moving towards ending their operations in Ukraine, Smoliy said, “I guess, yes,” but added that he was not ready to predict when that would happen.

“Taking into account the structures of the balance sheets and their dynamics in the last two years, they have significantly reduced their presence in the market, significantly reduced their assets, and this indicates that the banks are winding down their business,” he said.

Sberbank (SBER.MM) said in a statement its assets with high liquidity grew by 50 percent to $330 million in the first nine months of 2018. Sberbank has tried to sell its Ukrainian assets, but the central bank blocked the sale because the bids did not comply with Ukrainian law.

“It should be noted that the bank has always faithfully fulfilled and will continue to faithfully fulfill its obligations to customers,” Sberbank said.

VEB VNSCB.UL did not respond to a request for comment. But in a statement on Friday, its subsidiary noted that a court of appeal in Kiev had overturned the September freeze on its assets.

Last month, the Ukrainian central bank declared the subsidiary of Russia’s VTB (VTBR.MM) bank insolvent and put it under the control of a state guarantee fund, where its depositors, protected by law, would be paid out.

“The further sale of assets will happen, licenses revoked and - yes – the liquidation of the bank,” Smoliy said.

All three banks, before 2014, were among the top 15 biggest lenders in Ukraine.

Additional reporting by Tatiana Voronova in Moscow

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