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US Issues Full Blocking Sanctions on Sberbank and Alfa-Bank; New and Amended General Licenses; New Investment Ban for Russia

On April 6, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added two of Russia’s largest banks, Public Joint Stock Company Sberbank of Russia (“Sberbank”) and Joint Stock Company Alfa Bank (“Alfa-Bank”), and their subsidiaries to the Specially Designated Nationals and Blocked Persons List (“SDN List”).  OFAC also issued 3 new and 3 amended Russia-related General Licenses, and added several other parties to the SDN List.  President Biden also issued a new Executive Order , “Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression” (“New Investment Ban EO”).  The White House fact sheet on these measures can be found here .

Full Blocking Sanctions on Sberbank and Alfa-Bank

Sberbank and 42 of its subsidiaries, as well as Alfa-Bank and 6 of its subsidiaries, are now SDNs subject to full blocking sanctions.  This is a significant departure given that both Sberbank and Alfa-Bank were subject to more limited sanctions in the past, including those under Executive Order 14024 of April 15, 2021.  Certain of these limited sanctions are summarized in our previous blog post here .   

As a result of these designations, US persons are generally prohibited from dealing directly or indirectly with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests.  Non-US persons can be held liable for “causing” violations by US persons involving transactions with SDNs and can also be subject to secondary sanctions risks (which would include, in particular, the risk of designation as an SDN themselves) for providing “material support” to SDNs.

New General Licenses

• General License 21 authorizes, subject to conditions, US persons to engage in transactions ordinarily incident and necessary to the wind down activities involving Sberbank CIB USA, Inc., or any entity in which Sberbank CIB USA, Inc., directly or indirectly, holds a 50 perfect or greater interest, through 12:01 am ET, June 7, 2022.
• General License 22 authorizes, subject to conditions, US persons to engage in transactions ordinarily incident and necessary to the wind down activities involving Sberbank, or any entity in which Sberbank, directly or indirectly, holds a 50 perfect or greater interest, through 12:01 am ET, April 13, 2022.  This General License does not authorize transactions prohibited by Directive 2 under Executive Order 14024.
• General License 23 authorizes, subject to conditions, US persons to engage in transactions ordinarily incident and necessary to the wind down activities involving Alfa-Bank, or any entity in which Alfa-Bank, directly or indirectly, holds a 50 perfect or greater interest, through 12:01 am ET, May 6, 2022.

Amended General Licenses

• General License 8B , which amends and replaces previous General License 8A, adds Alfa-Bank to the list of entities with whom transactions “related to energy,” as defined in General License 8B, are authorized until June 24, 2022.  Please see our previous blog here for further details regarding the scope of this General License.
• General License 9B , which amends and replaces previous General License 9A, continues to authorize transactions that are ordinarily incident and necessary to dealings in debt or equity involving certain sanctioned banks, and adds Alfa-Bank within scope (through 12:01 am ET, June 30, 2022) subject to conditions.  Please see our previous blog here for further details regarding the scope of this General License.
• General License 10B , which amends and replaces previous General License 10A, continues to authorize transactions ordinarily incident and necessary to the wind down of certain derivative contracts involving certain sanctioned banks, and adds Alfa-Bank within scope (through 12:01 am ET, June 30, 2022) subject to conditions.  Please see our previous blog here for further details regarding the scope of this General License.

New Executive Order

The New Investment Ban EO prohibits “new investment” in Russia by a US person, wherever located, although the term “new investment” is not defined.  The New Investment Ban EO also authorizes OFAC to implement, in consultation with the US State Department, prohibitions on the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US person, wherever located, of any category of services to any person located in Russia.  Further, any approval, financing, facilitation, or guarantee by a US person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a US person or within the United States, is prohibited. 

We will be reporting further on these developments as OFAC implements the sanctions set out in the New Investment Ban EO.

The authors acknowledge the assistance of Ryan Orange in the preparation of this blog post.

• OFAC General License
• Sanctions Targets
• US Executive Orders
• US Imposed Sanctions
• US Sanctions against Russia

Ms. Lis has extensive experience advising companies on US laws relating to exports and reexports of commercial goods and technology, defense trade controls and trade sanctions — including licensing, regulatory interpretations, compliance programs and enforcement matters. She also has advised clients on national security reviews of foreign investment administered by the Committee on Foreign Investment in the United States (CFIUS), including CFIUS-related due diligence, risk assessment, and representation before the CFIUS agencies.

Eunkyung advices clients on various regulatory compliance and trade issues, concentrating on the US export controls such as the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), economic and trade sanctions, US customs and import laws, the US Foreign Corrupt Practices Act (FCPA), and foreign anti-bribery laws.

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Sberbank CIB takes top spots in 8 categories: Extel Survey

On June 9, 2018, Sberbank Investment Research, the research department of Sberbank’s corporate and investment banking business, has taken the first place in five of the nine categories of the Extel Survey 2018 and was recognized as having some of the best analysts in Russia and the C.I.S.

Sberbank CIB’s team also took the first place in the equity sales category and Olga Klimova, head of equity and managing director, was recognized as the best in her field.

Sberbank CIB’s annual conference Russia: The Inside Track was recognized as the top pan-European brokerage event.

Sberbank Investment Research analysts secured the first place in five of the nine categories available: telecommunications and media, small and mid-cap research, metals and mining, equity strategy, banks and other financials.

Sberbank Investment Research analysts also made the top three in the following categories: consumer retail, oil and gas, fixed income research, and economics and macro indicators.

Commenting on the results of the survey, Sberbank CIB’s vice president and the group’s head of the global markets department Andrey Shemetov said, “We are proud that Sberbank Investment Research has been recognized by the international investment community at the highest level. Our leading positions in multiple categories of this year’s WeConvene Extel Survey show that Sberbank Investment Research is one of the top investment research teams in Russia and the C.I.S. It is a testament to our commitment to providing leading-class, comprehensive research products that feature accurate and detailed information for making investment decisions.”

Sberbank Investment Research, one of the oldest research teams on the market, provides equity and fixed income investment support as part of Sberbank CIB’s global markets business. Sberbank Investment Research delivers comprehensive analysis of the market and publishes daily reports covering the economy, as well as equity and fixed income markets of the C.I.S. Sberbank Investment Research also calculates the Ivanov index of consumer confidence. In 2017, Sberbank Investment Research released more than 400 analytical pieces, aside from its daily reports.

The WeConvene Extel Survey was first introduced in 1974 by Thomson Reuters. Since July 2014, the survey has been compiled by WeConvene, a global platform that provides corporate services to buy-side and sell-side participants of the financial market. The Extel Survey is the leading independent ranking of investment market participants.

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In a dramatic turn of events, the Russian new car market faced a sharp decline of 62.6% in 2022, plummeting to a market value of $21.9 billion and

Sberbank CIB (UK) Limited goes into special administration

On 1 April 2022, the Court appointed David Philip Soden, Robert Scott Fishman and Matthew Steven Roe, all of Teneo Financial Advisory Limited, as joint special administrators of Sberbank CIB, following an application by Sberbank CIB’s directors.

What does Sberbank CIB do?

Sberbank CIB provides trading and execution services to its clients, including providing access to the Russian markets, and is authorised and regulated by the FCA.  

Why has Sberbank CIB entered special administration?

The UK and other countries have imposed sanctions against Sberbank, which have affected its UK entity, Sberbank CIB.

Sberbank CIB’s failure is the consequence of the ability and risk appetite of critical suppliers to work with firms with links to the Russian state following the invasion of Ukraine and the global imposition of sanctions.

This has led to the firm becoming operationally unable to make payments despite the firm having sufficient assets to cover its liabilities.

Having considered the firm’s position, the directors concluded that the firm is insolvent and applied to court to place the firm into special administration.

Where can I find more information?

Customers should contact Sberbank CIB, using your existing contact details, or the joint special administrators at Teneo Advisory Limited for further information. This page will be updated with specific contact details for customers of the firm as soon as possible.

What will happen to any client money and assets held by Sberbank CIB for its clients?

The joint special administrators will carry out an assessment of the client money and custody assets held by the firm to confirm the current position. Following that assessment, the joint special administrators will work to return client money and custody assets to customers in accordance with applicable law.

Costs associated with distributing client money back to clients, including the joint special administrators’ fees, will be deducted from the client money or custody assets.

The joint special administrators will write to the firm’s clients with their proposals for the special administration within 8 weeks of their appointment, this will include the process for making a claim.

Being alert to scams

All customers should remain alert to the possibility of fraud. If you are cold called by someone claiming to be from Sberbank CIB, Teneo or the joint special administrators please end the call and call them back using the number above.

Is the FCA overseeing the administration?

Sberbank CIB is still authorised by the FCA and remains subject to supervisory oversight and the FCA’s rules.

The joint special administrators are officers of the Court and need to comply with all insolvency law. The individuals appointed are authorised to act as licensed insolvency practitioners by the Institute of Chartered Accountants in England & Wales (ICAEW). We are liaising closely with the joint special administrators.

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Sberbank CIB

Founded year, about sberbank cib.

Sberbank CIB is a corporate and investment banking solutions company. The company provides corporate financing, investment banking, securities, and derivatives trading, market research, structured products, capital markets, private equity investments, IPO, mergers, and acquisition consulting, debt, and equity capital procurement, trading, and financial products. It is based in Moscow, Russia.

Headquarters Location

St. Vavilova

Moscow, 117312,

Russian Federation

Latest Sberbank CIB News

Jun 24, 2024

Russian court sides with Sberbank in debt recovery from ex-UK investment arm June 24, 2024 at 06:26 am EDT Share MOSCOW, June 24 (Reuters) - A Moscow court has sidedwith dominant Russian lender Sberbank in the bank'sefforts to recover loans totalling around $138.6 million fromits former British subsidiary, court filings showed on Monday. Sberbank said it was winding down operations at itsinvestment arm in London, Sberbank CIB (UK) Limited, in April2022, soon after being sanctioned as part of the Westernresponse to Moscow's role in the conflict in Ukraine. The British regulator, the Financial Conduct Authority, saidsanctions had left Sberbank CIB unable to make payments despitehaving sufficient assets to cover its liabilities and that itwas being declared insolvent and placed into specialadministration. The Moscow Arbitration Court satisfied Sberbank's claim infull, court filings showed on Monday. Sberbank had been seekingthe repayment of loans in four different currencies - 28.3million euros ($30.36 million), 3.2 million pounds ($4.05million), 3.4 million Canadian dollars ($2.49 million) and 8.8billion roubles ($101.73 million) - totalling around $138.6million. Sberbank CIB has around $105 million of cash held in variousbank accounts with Sberbank or held as collateral at Russia'sNational Settlement Depository (NSD), Sberbank CIB's UKadministrators said in a progress report published in April. The proceedings in commercial courts in Russia concern therepayment of certain loans owed by the company, Teneo, theadministrators, said in that report. "In the event those proceedings are successful...it isunclear...whether judgement in favour of (Sberbank) would enableit to take control of (Sberbank CIB)'s cash in Russia in lieu ofthe intercompany debts owed," Teneo said. Teneo did not immediately respond to a request for commenton Monday. ($1 = 0.9322 euros)($1 = 0.7896 pounds)($1 = 1.3674 Canadian dollars)($1 = 86.5000 roubles)(Reporting by Elena Fabrichnaya in Moscow and Alexander Marrowin London) Share

Sberbank CIB Frequently Asked Questions (FAQ)

When was Sberbank CIB founded?

Sberbank CIB was founded in 1991.

Where is Sberbank CIB's headquarters?

Sberbank CIB's headquarters is located at St. Vavilova, Moscow.

Who are Sberbank CIB's competitors?

Competitors of Sberbank CIB include Otkritie Bank and 4 more.

Compare Sberbank CIB to Competitors

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CBI websites generally use certain cookies to enable better interactions with our sites and services. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. You can read more about your cookie choices at our privacy policy  here . By continuing to use this site you are consenting to these choices.

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Sberbank Captures Russia Research Crown

Sberbank CIB is deemed the best for information about Russian companies, according to participants in Institutional Investor’s 2013 All-Russia Research Team survey.

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Russian court sides with Sberbank in debt recovery from ex-UK investment arm

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Reporting by Elena Fabrichnaya in Moscow and Alexander Marrow in London

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Sberbank CIB enters special administration as worldwide sanctions take their grip on London branches of Russian banks

The Financial Conduct Authority has announced this week that Insolvency Practitioners at Teneo Financial Advisory Limited have been appointed as special administrators following Sberbank CIB's entry into special administration.

Sberbank CIB is the UK arm of Russia's largest bank, Sberbank, and is authorised and regulated by the FCA. It provided trading and execution services to its clients and access to the Russian market. With the scope of sanctions on Russian entities ever expanding and an increasing refusal of UK business to been seen to engage with any entity with links to Russia, Sberbank CIB became operationally unable to make payments (despite having sufficient assets to make payment of its liabilities).

The directors of Sberbank CIB placed it into special administration and the special administrators were appointed on 1 April 2022. So what is a special administration and what are the initial steps that the special administrators will take?

A special administration applies where the entity in question carries out a function of a public nature. For example, water companies, energy companies, social housing and financial institutions may all find themselves facing a special administration in an insolvency scenario. More recently, you may recall that Bulb Energy were placed into special administration.

A special administration can only be commenced by order of the Court and there are three grounds on which the application may be made:

• Ground A: the investment bank is or is likely to be unable to pay its debts
• Ground B: that it would be fair to place it into special administration
• Ground C: that it is in the public interest to place it into special administration

Once administrators are appointed, their aims for the special administration will differ from the standard administration objectives. The administrators objectives will be:

• To ensure the return of funds as soon as reasonably practicable;
• To ensure timely engagement with authorities (for example, the Bank of England and the Financial Conduct Authority); and
• To rescue the institution as a going concern or to wind it up in the best interests of the creditors.

Unlike a standard administration, the special administrators may opt to prioritise any one of these objectives to achieve the best result for creditors and customers. However, there is a caveat to this: the FCA may direct the administrators to prioritise one of the objectives, if they see fit to do so.

Provisions in Schedule B1 of the Insolvency Act 1986 will apply to special administrations. Therefore, as you might expect, the administrators will need to produce a statement of proposals within 8 weeks, host an initial meeting of creditors and consider the appointment of a creditors' committee. The special administrators will work to return client money and custody assets to customers in line with applicable law.

However, the FCA are likely to want to be involved in the special administration of Sberbank CIB and they are entitled to insert themselves into the process. Indeed, the FCA have noted that they "are liaising closely with the joint special administrators". In particular, they may opt to send a representative to be present at creditors' committee meetings and make representations if they consider it appropriate to do so. Further, they may require that the administrators produce evidence that they have put a formal communication strategy in place to keep creditors and customers updated.

Together with the news this week that the London branch of Russia's VTB Bank has entered administration (also with insolvency practitioners at Teneo appointed), the special administration of Sberbank CIB is a significant insolvency event in London. It does, of course, remain to be seen how much further damage the sanctions will do to Russia's international financial position and what impact this will have on Russian-based financial entities with a presence the UK.

Sberbank CIB’s failure is the consequence of the ability and risk appetite of critical suppliers to work with firms with links to the Russian state following the invasion of Ukraine and the global imposition of sanctions.   https://www.fca.org.uk/news/news-stories/sberbank-cib-u

Filed under

• United Kingdom
• Insolvency & Restructuring
• Charles Russell Speechlys

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• Financial Conduct Authority (UK)
• Bank of England

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