On 3 March 2022, the index provider MSCI (Morgan Stanley Capital International) decided to remove Russian equities from its indices from 9 March 2022. The reasons were critical feedback from investors, brokers, traders and stock exchanges that the Russian stock market was currently not investable. FTSE Russell, a subsidiary of the London Stock Exchange, also announced such steps for 7 March 2022. German fund companies such as DWS and Union Investment also no longer want to invest in Russian shares.
Investors holding global equity funds or ETFs, such as the MSCI World Index, will only be affected to a small extent. The decision to suspend savings plans should be considered carefully – panic is not a good advisor. Those who have broadly diversified their assets – and that should be an investment in globally investing funds or ETFs – have not suffered losses in the past with an investment horizon of 15 years. If one has not specifically bought Russian securities – stocks or bonds – the performance will be within normal fluctuations.
Are accounts at banks with Russian roots safe?
The European Union has had sanctions against Russia since 2014 – when the current spiral of violence was set in motion with the support of pro-Russian separatists. The financial sector has been affected by this for some time.
But the question of the security of overnight and fixed-term deposits at European subsidiaries of Russian banks has become more explosive since February 2022. Reactions and sanctions by the EU have now become much tougher and further Russian countermeasures are conceivable.
Various institutions with Russian roots have appeared on the German market, mainly with overnight and fixed-term deposit accounts.
These are usually subsidiaries of Russian banks, such as VTB Austria AG, based in Vienna, which maintains a branch for the German market with VTB Direktbank in Frankfurt am Main. Others are, for example, Sberbank Europe, FIBR (Amsterdam Trade) or East West Direkt.
Sberbank Europe is already in trouble. It was closed by the responsible Austrian financial market supervisory authority on 1 March 2022.
But German and European banks can also be affected by the war if they have business commitments in Russia or Ukraine.
Deposits in the sense of statutory deposit protection (e.g. credit balances on current accounts and savings books, call money, time deposits and savings bonds) are generally protected up to at least 100,000 euros per institution with its own licence and customer in Europe. Read more about money in the Russian crisis in our separate article.
