The Chairman of the Board of Management, Christian Sewing, is not only directly feeling the effects of the Russian invasion of Ukraine through the significant drop in the Deutsche Bank share price.

As President of the Association of German Banks (BdB), he also has to worry about the continued existence of the German subsidiary of the major Russian bank VTB.

Because it has collected deposits of around 4 billion euros from German investors, which are protected by the deposit guarantee systems of private banks.

Markus Fruehauf

Editor in Business.

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If the Frankfurt-based VTB Bank Europe SE, like the European subsidiary of Sberbank, soon has to file for insolvency, the protection systems of the BdB are threatened with a new case of compensation after the difficulties of the Greensill Bank had already cost the private banks 3 billion euros last year.

EUR 1 billion of this was accounted for by the legally guaranteed deposits of EUR 100,000 per customer and EUR 2 billion by the additional voluntary deposit guarantee.

Once again, the BdB had to reorganize its deposit guarantee systems and reduce the commitments to customers.

VTB Bank is currently being closely monitored by the banking supervisors of the Bundesbank and the Federal Financial Supervisory Authority (Bafin).

A Bafin spokeswoman said when asked by the FAZ: “We are in close contact with the bank.” VTB is currently not accepting any new customers.

That should have been decreed by the Bafin.

The ban on accepting new deposits is a precursor to the moratorium.

The bank is then no longer allowed to make any payments to protect existing customer deposits.

Nevertheless, the Bafin spokeswoman reassured: "Existing customers who are not subject to the sanctions can dispose of their credit within the framework of the contractual agreements."

withdrawal from Europe

A report by the “Financial Times” at the weekend, according to which VTB Bank wanted to withdraw from Europe, caused nervousness.

The sanctions against Russia, especially in the financial sector, have already caused the European subsidiary of Sberbank, the largest Russian institute before VTB, to disappear.

The unit is based in Austria and now burdens the deposit insurance there with 1 billion euros for legally guaranteed deposits.

The Austrian security systems currently have only 550 million euros.

The Austrian banks will have additional payment obligations, and that for mostly German customers, from whom Sberbank, like VTB, had collected deposits with attractive interest rates.

"If there were a compensation case at VTB, the German system, which had already been weakened by the Greensill bankruptcy, could face a significant burden," confirmed Ingo Frommen, analyst at Landesbank Baden-Württemberg (LBBW), on Tuesday assessment made in a research report.

He thinks it is possible that the damage could occur in a few days.

Deutsche Bank and Commerzbank face high burdens

According to Frommen, around 180,000 customers currently hold deposits of over 4.3 billion euros at VTB Bank.

How much of this is attributable to the legally guaranteed protection of 100,000 euros per customer and bank is not yet known.

Since a large part of the deposits is due on demand, it is difficult to estimate the current status, according to Frommen.

He assumes that deposits that are not protected by the deposit insurance fund will be withdrawn from the bank to a large extent.

Depositors with secured deposits should see the situation relatively relaxed and wait and see.

Should there be a new case of compensation for the security systems of the private banks, the LBBW expert expects a further increase in the levies on the security systems.

In particular, Deutsche Bank and Commerzbank would be affected over time by an estimated three-digit million amount.

It is true that Frommen cannot imagine that the security instruments would be overburdened or even take an “oath of disclosure”.

If the worst came to the worst, however, the German state would be called upon to intervene for political reasons to support German deposit insurance.

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