FRANKFURT: Germany’s banking regulator on Sunday said it had stripped Russia’s VTB of control over its European subsidiary as sanctions hit the second-biggest Russian bank over the war in Ukraine.

The Russian group “no longer has control” over its Germany-based subsidiary VTB Bank SE after a ban on exercising its right to vote, financial markets authority BaFin said in a statement.

The regulator said VTB can no longer access the financial assets of its subsidiary, which is now “completely isolated” from the Russian group.

The European entity’s activities can continue, but its board cannot follow directives from VTB, which was placed on an EU sanctions list on Friday.

A ban on transferring funds to “VTB group entities” has been in force for “several weeks”, BaFin added.

VTB had already been hit by US sanctions and excluded from the international SWIFT banking system.

Russia’s largest bank, Sberbank, has faced sanctions since February. Its Austria-based European subsidiary faces the possibility of liquidation amid serious cash flow problems.

BaFin added that VTB’s operations remained “unchanged” and that clients could still freely access their deposits.

According to German business daily Handelsblatt, four of VTB Europe’s five board members have recently resigned and the company has taken on no new customers since early March.