LONDON, United Kingdom – The British unit of Russian bank VTB will be placed in administration in the coming days, subject to a license being granted to do so by United States sanctions authorities, a judge at London’s High Court said on Wednesday, April 6.
The order to appoint administrators would not be sealed until the US Office of Foreign Assets Control issued a license permitting the action, the judge added.
Western sanctions on Russia have largely cut Moscow off from the global financial system and made some of the international operations of Russian banks unviable.
State-owned VTB, Russia’s second largest bank, had already said last month it planned to close the London-based arm of its investment bank, after laying off some of its staff.
Britain froze VTB’s assets on February 24, as part of an early wave of sanctions following the invasion.
As the British-based arm of VTB’s investment banking business, VTB Capital lent money to businesses and advised on mergers and corporate fundraising for Russia-related deals.
Judge Timothy Fancourt said the sanctions had caused the company financial difficulties – including its funds being frozen in an account held with its correspondent bank HSBC – and otherwise it was balance sheet solvent.
VTB had already been winding down the London-based unit for several years, the judge said.
More than 60 staff are still employed by VTB’s UK unit, the company directors’ QC, Daniel Bayfield, told the court.
British regulators did not seek to put the unit in special administration – a form of insolvency designed to protect the wider market – partly due to its recent downsizing, Bayfield said.
VTB rival Sberbank placed its investment arm in London in special administration last week, while London-based broker Sova – controlled by Russian banker Roman Avdeev – entered the same process in March. – Rappler.com