Customers of Sberbank Europe, based in Vienna, will receive the first compensation payments this week from Einlagensicherung Austria (ESA) and the German Banks Compensation Scheme (EdB), which is acting on their behalf.

The deposits covered and thus to be compensated amount to 947 million euros.

Of this, 939 million euros are held by customers in Germany, the ESA announced on Wednesday.

Michael Seiser

Business correspondent for Austria and Hungary based in Vienna.

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In accordance with the Deposit Protection and Investor Compensation Act (ESAEG), customer deposits of up to EUR 100,000 per person are protected by Einlagensicherung Austria.

34,800 private customers in Germany who have invested their money in the online branch “Sberbank Direct” are affected.

For these persons, the operative processing of the compensation procedure is carried out by the EdB on behalf and on account of the ESA.

Sberbank Europe is the EU subsidiary of the partially state-owned Sberbank, the largest financial institution in Russia.

Cash outflows after the start of the Ukraine war and the subsequent sanctions imposed on Russia by the European Union have put the bank in trouble.

At the beginning of the month, the Austrian Financial Market Authority (FMA) prohibited Sberbank Europe from continuing business operations with immediate effect due to a decision by the EU Committee for Standardized Resolution (SRB).

This triggered a security case within the meaning of the Deposit Protection and Investor Compensation Act (ESAEG).

Further steps in processing the compensation are explained in the letter.

"Basically, in order to transfer the compensation amount, we need the IBAN of an account at another bank from the depositor," said ESA Managing Director Stefan Tacke.

"In some cases, it is also necessary to send a copy of an official photo ID." As soon as ESA or EdB have received the necessary information, the transfer will be carried out.

The end of Sberbank Europe is costly for Austrian financial service providers.

All of the financial resources required for the compensation were raised proportionately by all Austrian banks and are available on the ESA payment account or on the EdB payment account.

ESA Managing Director W had declared at the beginning of March that the deposit insurance would get back most of the funds it now used for compensation via insolvency proceedings.