In Ukraine, selling risky Russian banks’ assets is an uphill battle

Less than two days into Russia's full-scale invasion of Ukraine, two Russian banks – Prominvestbank and MR Bank, former Sberbank of Russia in Ukraine, were liquidated by the central bank, the NBU. Both were owned by state-owned Russian entities: MR Bank. 100 percent owned by the state-owned Sberbank of Russia, and 99.77 percent of Prominvestbank was owned by the state development corporation VEB.RF.

The problems with the banks had been growing since 2014. Sberbank's Russian roots made borrowers wary. Vnesheconombank, a shareholder of Prominvestbank, was sanctioned by the US and the EU over Russia's annexation of Crimea, and in 2017, Ukraine’s national security and defence council slapped sanctions on its subsidiary in Ukraine.

Prominvestbank and MR Bank have historically lent to large Ukrainian businesses and state-owned enterprises, which can be described as critical infrastructure after Russian missile attacks. Both banks lent to Ukrzaliznytsia; Prominvestbank lent to Zaporizhstal; and MR Bank lent to the state-owned enterprise Electrotyazhmash, which develops and manufactures turbo and hydro generators, large DC electric machines, and electrical equipment for railway and urban electric transport.