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The fallout from Russia’s widely condemned invasion of Ukraine continued to reverberate on Wednesday, leaving its stock exchange closed for a third day and forcing its biggest bank out of most European markets.
Sberbank’s
RU:SBER
SBNC,
secondary listing in London was trading around 2 cents, having lost nearly 99% of its value in the days since the invasion began. The Deutsche Börse announced Tuesday that it would suspend trading in any Russian-linked securities to protect investors.
“In the current environment, Sberbank has decided to withdraw from the European market. Subsidiary banks of the group faced abnormal cash outflows and threats to the safety of employees and banks,” said the bank, Russia’s largest in terms of assets, in a statement on Wednesday.
“Due to the order of the Central Bank of Russia, Sberbank of Russia won’t be able to supply liquidity to European subsidiary banks,” it said, though adding that the bank has enough capital to ensure customer deposits and make payments to all depositors. Sberbank in Switzerland will continue to operate as normal and isn’t part of the Sberbank Europe group, the bank said.
Sberbank operates in eight European markets: Austria, Bosnia and Herzegovina, Croatia, Czech Republic, Germany, Hungary, Slovenia and Serbia. Its exit comes after a warning from the European Central Bank on Monday that it faced failure over a rush of depositors to remove their money.
Read: Gazprom, Lukoil and Sberbank are now penny stocks as Russian companies collapse in London
Stocks with ties to Russia have suffered heavy losses this week, with secondary listings of natural-gas producer Novatek
NVTK,
dropping another 96% on Wednesday, and PhosAgro
PHOR,
stock fell another 97%, though retail chain Fix Price Group
RU:FIXP
rebounded 149%.
Under severe pressure from sanctions, Russia’s central bank has been scrambling to stabilize the ruble
USDRUB,
doubling interest rates earlier this week and banning brokers from carrying out sell orders on Russian securities by foreign investors.
Read: Putin signs decree to prohibit leaving Russia with more than $10,000 in foreign currency
Russia’s stock market was closed for a third day, according to a statement from the central bank.
Elsewhere, European stocks
SXXP,
managed a late-afternoon gain, tracking a positive session on Wall Street, with the index up 0.5% to 444.57. Global investors have nervously been watching the war unfold in Ukraine, with intense Russian shelling in major cities on Wednesday. Russia and Ukraine delegates were expected to continue talks later in the day.
Energy stocks were among the biggest gainers in Europe, as oil prices
CL00,
surged to multiyear highs amid fears that the conflict will lead to supply shortages, with Russia under tremendous pressure from sanctions and global backlash from corporations.
Shares of Shell
SHELL,
SHEL,
TotalEnergies
TTE,
TTE,
and BP
BP,
BP,
were all climbing by more than 3%.
High energy prices were behind a 5.8% surge in annual inflation in the eurozone, a number that surged past forecasts and was the highest print in history, according to Eurostat. The region saw months of high prices for gas and electricity, with Germany among those heavily dependent on Russian gas. Benchmark Dutch TTF gas prices surged 30% on Wednesday.
Auto stocks were under pressure over concerns that the conflict will disrupt supply chains further, with Porsche
PAH3,
and Volvo
VOLCAR.B,
down by 3% or more.
Ericsson shares
ERIC,
ERIC.B,
took the hardest hit among European companies, dropping 15% after the Justice Department said it had breached a deferred prosecution agreement a second time after failing to inform regulators about potential dealings with Islamic State terror organization.
“This breach is in addition to the DOJ’s earlier determination of a breach under the deferred prosecution agreement (DPA), which Ericsson announced in Oct-21,” noted a team of analysts at Citigroup led by Andrew Gardiner.
“Further penalties are likely manageable, particularly relative to the >$10bn in value that has been erased in the last two weeks, but the persistent uncertainty and claims of further wrongdoing and insufficient disclosure to authorities likely makes Ericsson uninvestable for many,” they said.
