Czech municipalities, whose money is frozen in Russian bank, ask state for help

Many regional and municipal administrations in the Czech Republic who saved at least part of their funds in Russia’s Sberbank have lost access to their money since the bank lost its license after the invasion of Ukraine. Amid fears that this could lead to financial problems for some districts, the Association of Towns and Municipalities is set to discuss the issue with the Ministry of Finance.

Dozens of Czech municipalities and towns, as well as four of the country’s regional administrations, had saved parts of their public funds in Russia’s Sberbank over the past several years. Russia’s invasion of Ukraine and the subsequent cutting off of the bank from the Western financial system has led to this money becoming no longer accessible.

For the authorities of the Vysočina region this means a loss of CZK 2 billion, at least until a settlement can be reached regarding the remaining assets of Sberbank in the Czech Republic, which are in the process of liquidation. Meanwhile, for the South Moravian town of Uherský Brod this means being cut off from CZK 21 million worth of public funds. News site Seznam Zprávy, over CZK 2.5 billion of regional public funds could be frozen in Sberbank in total.

This underestimation of political risk has led many of the concerned administrations to look for emergency solutions. One of them is the mayor of the Silesian town of Fulnek, Petr Ertel.

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Author: Tom McEnchroe