Sberbank and the Risk Investors Forgot: When a Cheap Share Becomes an Uninvestable Asset

Why valuation, diversification and a Swiss passport were not enough when sanctions, capital controls and financial plumbing collided

Investors normally think about risk in terms of price. A company can earn less than expected, interest rates can rise, currencies can fall, competitors can improve, or an expensive share can simply become cheaper. Diversification exists largely because we cannot reliably predict which of these things will happen next.

The experience of foreign investors in Sberbank after Russia’s invasion of Ukraine in February 2022 revealed a different category of risk, one that is mentioned in prospectuses but receives remarkably little attention when markets are calm: the company can continue operating, the shares can continue representing an economic interest, and yet a foreign investor can lose the practical ability to trade, transfer, settle or receive the proceeds from that investment.

That is not ordinary volatility. It is what we might call investability risk.

Sberbank is a particularly useful case because the pre-war investment was not absurd on conventional financial grounds. In 2021, the group reported net profit of RUB1.246 trillion, up almost 64% from the previous year, while return on equity reached 24.2%. Russia’s largest bank combined scale, profitability, a growing digital business and a valuation that could look unusually low beside many Western financial institutions. СберПро | Медиа

An investor could therefore have been broadly correct about the company and still have suffered an extraordinary investment outcome.

That distinction matters far beyond Russia. It is particularly relevant today when investors examine inexpensive companies in China and other markets outside the traditional G7 financial system, because the value of a security and the ability to exercise the rights attached to that security are two different things.

The share looked cheap for risks investors thought they understood

Before 2022, an investment case for Sberbank could be constructed in relatively conventional terms.

The bank occupied an extraordinary position inside Russia. When the US Treasury later imposed full blocking sanctions, it described Sberbank as Russia’s largest financial institution, with roughly one-third of Russian banking assets and a central role in domestic deposits and credit. U.S. Department of the Treasury

For a value investor, the combination was appealing precisely because the risks were obvious. Russia had weak institutional characteristics by Western standards, substantial state involvement in the economy, commodity dependence, geopolitical tensions and an existing history of sanctions. These shortcomings contributed to lower valuations.

The reasoning was therefore not necessarily naïve:

the country is risky; the share is cheap because the country is risky; if the business continues to compound earnings and the extreme risks do not materialise, a substantial valuation discount provides a margin of safety.

The weakness in that reasoning was more subtle. A conventional margin of safety assumes that the investor will still own a usable security after the adverse scenario occurs.

If earnings fall by 30%, we can estimate a lower valuation. If the currency falls by 30%, we can translate earnings at a different exchange rate. If the share price halves, the investor can choose to sell, hold or buy more. But what discount compensates for a scenario in which the market ceases to function for you?

The geopolitical warning signs were already visible

It would also be misleading to present 2022 as a completely unimaginable event.

Following Russia’s annexation of Crimea, the United States imposed sectoral sanctions on Sberbank in September 2014, restricting US persons from transactions involving specified new debt and new equity. U.S. Department of the Treasury

Yet those measures did not make the entire existing Russian equity market inaccessible to international investors. Foreign investors continued to analyse Russian companies, buy and sell securities, receive dividends and hold Russian exposure through domestic shares, depositary receipts and investment funds.

Paradoxically, years of functioning under limited sanctions may have made the eventual risk easier to underestimate. Investors had observed sanctions before. Markets had survived them. The mental model could therefore become:

more geopolitical tension means somewhat stronger sanctions.

What happened in 2022 was qualitatively different. Rather than one familiar risk becoming incrementally worse, several parts of the financial system ceased functioning normally at almost the same time.

What actually failed in 2022

When Russia launched its full-scale invasion of Ukraine on 24 February 2022, the first US measures against Sberbank restricted correspondent and payable-through accounts and its access to the US financial system. The United States then escalated to full blocking sanctions against Sberbank on 6 April. U.S. Department of the Treasury

Western measures, however, were only one side of the story.

On 28 February 2022, the Central Bank of Russia imposed restrictions on transfers involving Russian securities held by foreign investors and foreign nominees. Clearstream subsequently reported that Russia’s National Settlement Depository had blocked securities held in its foreign nominee account and suspended payments to foreign holders. Clearstream

Clearstream then closed settlement in Russian domestic securities because it could no longer obtain sufficient assurance that book-entry transfers would achieve finality. Ruble settlement was also curtailed. Clearstream

The practical consequences were extraordinary. While Sberbank was announcing its record 2021 results, its London depositary receipts collapsed to around 1.7 US cents as trading conditions disintegrated and the Moscow market was closed. euronews

MSCI subsequently consulted institutional investors and reported that an overwhelming majority regarded the Russian equity market as uninvestable. Russian securities were removed from its emerging-market indexes at a price effectively equal to zero. MSCI Inc. MSCI was not declaring every Russian company economically worthless.

It was saying that an international institutional investor could no longer access the market in the manner required for a normal investable index.

One investment, six different risks

The Sberbank experience is easier to understand if the event is decomposed rather than described simply as “sanctions.”

Risk	Normal investor question	What the Sberbank experience added
Business risk	Will profits fall?	The business can continue while foreign access disappears
Market risk	Can the share price collapse?	The reference market itself can become inaccessible
Currency risk	Can RUB depreciate?	Conversion and settlement can also be restricted
Sanctions risk	Can the issuer become restricted?	Different jurisdictions can impose different prohibitions
Custody risk	Is my broker financially safe?	An upstream custodian or CSD can become blocked
Capital-control risk	Can money leave the country?	The issuer’s home state can restrict foreign ownership independently

Investors spend enormous amounts of time analysing the first three.

The final three frequently receive a paragraph near the back of an ETF prospectus.

For politically exposed markets, that weighting deserves reconsideration.

The Swiss investor’s uncomfortable lesson: nationality is only one layer

A Swiss investor might reasonably assume that a dispute between Washington and Moscow is primarily a problem for American investors.

That is only partly true.

OFAC rules generally bind US citizens and permanent residents, persons within the United States, US-incorporated entities and their foreign branches, with the exact perimeter depending on the particular sanctions programme. OFAC

A Swiss resident is therefore not transformed into a US person merely by buying an international share.

But the investor is only one participant in the transaction. A simplified securities chain might look like this:

Swiss investor → broker → global custodian → international securities depository → Russian National Settlement Depository → Sberbank

Each arrow represents a legal and operational relationship.

If one intermediary is prohibited from processing a transaction, another cannot obtain settlement finality, or the issuer’s home country prevents the foreign nominee from transferring the security, the nationality of the ultimate investor may offer little practical help.

Switzerland itself subsequently imposed additional measures. On 3 August 2022, the Federal Council subjected Sberbank to an asset freeze and prohibition on providing funds or economic resources, while creating limited derogations for matters such as an orderly wind-down. Federal Council

The result was not a single American sanction reaching magically across the world.

It was an accumulation of restrictions imposed by different jurisdictions and different parts of the market infrastructure.

Four states can exist between “I own it” and “I can use it”

One of the useful conceptual lessons from Sberbank is that ownership should not be treated as binary.

A security can be:

1. Owned and freely tradable

This is the normal condition investors implicitly assume.

2. Owned but illiquid

A buyer might exist, but finding one at a reasonable price is difficult.

3. Owned but operationally immobilised

The investor retains an economic interest, but settlement or transfer infrastructure prevents normal dealing.

4. Legally blocked

The security remains legally owned, but relevant transactions are prohibited unless authorised.

OFAC’s own explanation of blocking illustrates the final category particularly clearly: blocked property is frozen rather than confiscated, so title generally remains with the owner, while transfers and ordinary exercises of ownership rights are prohibited without authorisation. Stocks and bonds fall within the relevant definition of property. OFAC

The distinction may sound technical. For a long-term hedgde fund investing in distress assets, that may be acceptable, but nor for an investor trying to finance retirement, buy a house or rebalance a portfolio.

The problem can last much longer than the initial crisis

Market participants initially experiencing the Russia restrictions in 2022 might reasonably have hoped that the problem was temporary.

Yet Clearstream’s 2025 regulatory disclosure showed how persistent these problems could become. Russian securities remained blocked through a combination of Russian countermeasures and European sanctions affecting the Russian National Settlement Depository, while some corporate-action proceeds remained inaccessible upstream. Clearstream

This is another important investment lesson.

An investor does not only need to ask: How much could this asset fall?

He may also need to ask: How long could this asset remain unusable?

A temporary inability to sell for three days is an inconvenience. Three months may create a liquidity problem. Three years can fundamentally change financial planning.

History contains other versions of the same problem

Russia in 2022 was unusual, but the underlying phenomenon is older than modern electronic markets.

In November 1979, the United States froze Iranian government and central-bank assets following the hostage crisis. Contemporary US government records describe billions of dollars of property being blocked, including assets located in foreign branches of US banks. Office of the Historian

During the Second World War, the US Foreign Funds Control system similarly imposed restrictions on currencies, securities, credits and other forms of ownership linked to designated foreign states and nationals. National Archives

The political circumstances, legal authorities and eventual outcomes were very different in each case, and they should not be treated as interchangeable historical precedents.

The narrower lesson is enough: international ownership ultimately operates through legal systems and financial infrastructures, and in extreme geopolitical circumstances those infrastructures can themselves become part of the conflict.

The missing question in conventional value investing

Traditional fundamental analysis asks good questions:

What does the company earn?

How much debt does it have?

What is its competitive advantage?

How much pessimism is already reflected in its share price?

What return can shareholders expect if the business performs reasonably well?

For an investment exposed to substantial geopolitical fragmentation, the analysis should add another layer:

What conditions must remain true for me to continue exercising ownership?

That question leads naturally to the custody chain.

Guidefinances Checklist: Geopolitical Investment Evaluation

Before making a significant investment in a politically exposed foreign market, check:

• What exactly do I own: ordinary share, ADR, ETF, certificate or derivative?
• In which country is the instrument legally issued?
• Which country regulates my broker?
• Who actually provides custody?
• Is a foreign sub-custodian involved?
• Which central securities depository ultimately records the asset?
• Can the issuer’s country restrict foreign transfers, dividends or currency conversion?
• Can the broker’s country prohibit transactions in the asset?
• Can the position currently be transferred to another custodian?
• Is there another listing or another legal wrapper?
• What proportion of my household assets shares the same geopolitical exposure?
• Could I tolerate the position being inaccessible for several years?

This is not a tool for predicting geopolitics.

It is a tool for identifying dependencies.

A valuation discount cannot solve every risk

One temptation is to argue that all risks can ultimately be incorporated into the purchase price.

Sometimes they can.

A cyclical company with volatile profits should trade more cheaply than a highly predictable company. A company with weak governance should normally require a larger expected return. A currency with high inflation deserves a different valuation framework.

Yet investability risk has an awkward discontinuity. Suppose a bank generating attractive profits trades at half the valuation of comparable Western banks. If the adverse scenario is a 30% earnings decline, the discount may compensate adequately.

If the adverse scenario is five years during which the foreign shareholder cannot transfer or sell the asset, the meaning of the discount changes. This does not make valuation useless.

It means position size and portfolio construction may offer more reliable protection against extreme jurisdiction risk than pretending to calculate a precise geopolitical risk premium.

The margin of safety should include liquidity outside the investment

This leads to a broader Guidefinances principle: An investor can rationally hold investments that might become temporarily difficult to access, provided those assets are not required to meet near-term obligations.

The problem becomes more serious when a geopolitically exposed position is simultaneously supposed to finance:

• emergency spending;
• near-term retirement withdrawals;
• taxes;
• education;
• a property purchase;
• or other liabilities with fixed timing.

A volatile asset can be held through volatility if the investor has time.

An immobilised asset requires something else:

liquidity somewhere else.

Portfolio Immobilisation Stress Test

What happens to my financial plan if I cannot access this investment for one, three or five years?

Test separately:

• direct foreign shares;
• country ETFs;
• broker cash balances;
• Pillar 3a assets;
• occupational-pension exposure;
• property;
• emergency liquidity.

Then distinguish loss of value from loss of access.

They are not the same risk.

Guidefinances view: investability belongs inside the investment thesis

The Sberbank experience does not justify avoiding every country outside the G7, and it certainly does not prove that the next geopolitical rupture will resemble Russia in 2022.

The more useful conclusion is less dramatic. An investment is not merely a company. It is a company plus a currency, a legal claim, a market and a custody chain.

During normal periods those additional layers are almost invisible because modern market infrastructure works remarkably well. The convenience is so complete that investors can mistake it for permanence.

Sberbank demonstrated why that assumption deserves occasional scrutiny. The investor could have been correct that Sberbank was profitable. He could have been correct that the shares were inexpensive. He could even have been correct that the underlying bank would survive.

What he also needed to be correct about was that the mechanisms connecting a foreign owner to the asset would remain usable. That is a different forecast entirely.

Continue the series

Part II — Could China Become Another Sberbank? Three Sanctions Scenarios for European and Swiss Investors

The Sberbank case tells us what can happen when investability collapses. Part II asks the more difficult forward-looking question: how would targeted restrictions, broad financial sanctions or severe market fragmentation affect Chinese ADRs, Hong Kong shares, mainland A-shares and ETFs?

Part III — Beyond Asset Allocation: Should Investors Diversify Brokers, Custody and Jurisdictions?

The final article moves from scenario analysis to portfolio architecture: what a Swiss, US or Singapore custody relationship actually changes—and what it cannot change.

Useful Guidefinances tools and guides

Guidefinances Checklist: Geopolitical Investment Evaluation: –See above

For the broader Swiss broker comparison, see Best Broker for Swiss Investors in 2026: Fees, Tax and Simplicity. Best Broker for Swiss Investors in 2026

Research and sanctions information reviewed 26 September 2026. Sanctions depend on the specific programme, security, intermediary, jurisdiction and transaction and can change rapidly. This article is educational and does not constitute individual investment or legal advice.