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London branch of sanctioned Russian bank VTB on the brink of collapse | business news

The London-based arm of VTB Bank, Russia’s second-biggest lender, is about to open bankruptcy proceedings after international sanctions impacted its ability to continue operations.

Sky News understands UK banking regulators have brought in advisers to help manage VTB Capital’s operations in the city.

Banking industry sources said that VTB Capital could enter a special administration or liquidation process as early as this week.

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Sanctions can only be lifted if Russia withdraws

Insolvency practitioners are understood to have been put in place to handle the proceedings, the industry sources added.

Its prospective demise was hastened by a decision by clearing banks, including HSBC, to halt trading in it measurements taken by the Office of Financial Sanctions Implementation, a department of the Treasury Department.

Reports in recent weeks have suggested that VTB Capital’s London business has already been wound up and many employees have been laid off.

Should VTB Capital’s London arm default, it would be the city’s most significant meltdown to date resulting from Russia’s war in Ukraine, although its failure would have no significant impact on Britain’s financial system.

A smaller broker, Sova Capital, collapsed earlier this month after being prevented from accessing a capital injection from shareholders.

Bloomberg News reported on Wednesday that VTB Capital’s broader European operations would be put up for sale – a plan it says has the backing of banking regulators in Germany.

VTB did not respond to an emailed request for comment.

The Prudential Regulation Authority, which regulates banks and is part of the Bank of England, declined to comment, while the Financial Conduct Authority confirmed it works with the firm but declined to comment further.

HSBC declined to comment.

London branch of sanctioned Russian bank VTB on the brink of collapse | business news

Source link London branch of sanctioned Russian bank VTB on the brink of collapse | business news

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