What happens when a bank leaves a country?

Let’s say that your country gets in a political fight with another country, for whatever reason, then that country puts sanctions on your country and it’s companies and banks leave your country.

If you had money in a foreign bank of that country that left, then what happens, do you say goodbye to the money or do you somehow still keep it?

it depends on the procedure that happens. In some cases the government takes over the bank and all the shareholders lose their investment. As far as depositors money the gov. could keep that too or leave it alone.

In some cases, they probably just sell out to another bank which takes on its assets including accounts. I’ve had my accounts here in Panama successively transferred between banks headquartered in the US, the UK, and Colombia, then closed that account and moved it to a US bank, which was then bought out by a Canadian bank.

In some cases the country might just confiscate the banks themselves, but they most likely would honor the accounts of their own citizens.

There might be some extraordinary cases in which you might lose your money, but I think the country would take steps to avoid repercussions on at least their own citizens. That wouldn’t be politically popular.

There are definitely circumstances where the government has frozen withdrawals (Argentina 2002, for instance), at which point your savings could be inflated out of existence, but in the extreme event that your account is just forcibly closed (not that the bank itself is insolvent), I would expect them to send you a cheque, not steal your money.

In this case where Russian customers got kicked out of Cypriot banks due to U.S. sanctions, there was advance notice enabling affected customers to transfer their deposits out of the country or to a different bank in an orderly fashion.

If I understand your question correctly, you’re talking about a major bank with international branches, that closes its branch in a certain country? Say, Citibank has a branch in Venezuela, but the U.S. imposes sanctions on Venezuela and Citibank close their Venezuela branch? If that’s what you’re asking - well, an institution like Citibank would not just default on their customers, even if technically this were a separate subsidiary entity. A USD-denominated account should be fine. However, the outcome for local currency accounts might not be under Citibank’s control, if there’s political malice then the local government could do something nasty.

Something like that, I’m from Serbia and we are kind of between west and east, an eu candidate, but with national interests that are extremely different to western interests (Kosovo dispute, friendly relations with Russia,etc.) , we are balancing for now, but sooner or later we’ll find ourselves in a situation where we have to choose either the EU, but give up on Kosovo and Russia or vice versa, if we don’t choose the west, there might be sanctions against us (like in the 90’s), so I’m wondering what would that mean for people that have money in western banks, since most banks here are directly or indirectly controlled by western banks, Intesa, UniCredit, OTP,etc.

For example the bank I use is a daughter company of the Hungarian OTP bank family.

So you’re talking about local currency (dinar) accounts? If anything adverse happened with local currency accounts, it would be due to action by the Serbian government. If you are a local citizen with a normal bank account, not doing anything dubious that might upset the Serbian government, then I wouldn’t worry about losing my money. Some kind of orderly transfer of the account would occur. But no doubt you realize that if sanctions are imposed, the market value of the dinar would collapse relative to the Euro.

If you are a local citizen with a Euro account? Well, the Serbian government doesn’t really have any direct control over Euros. A major reputable non-Serbian bank would still have your Euros for you even if they closed their Serbian operation. Any adverse outcome would be through the Serbian government having some reason to act against you as a person - what they could do is bar you from accessing the Euros within Serbia, or they could impose legal sanctions on you (if you’re living in Serbia) for holding a Euro account.

This has happened to me twice in recent years.

I had a mortgage with Bank of Scotland (Ireland), which announced that it was ceasing operations in Ireland. My mortgage agreement with the bank remained in force, and they appointed a local company to manage the mortgage accounts of its Irish customers.

I had a savings account with Rabodirect, a subsidiary of Dutch bank Rabobank, which announced that it was ceasing operations in Ireland. I received multiple notices over a period of many months that I should withdraw my savings in full before a certain date in May 2018. I was also informed that if I did not withdraw my savings in the normal way before that date, the funds would be held for me by Rabobank and I would be able to recover my money by a different (and more onerous) process.
In general, if you have money on deposit with a foreign bank, they are not allowed to just keep it even if they no longer operate in Serbia. The bank still has your money and must provide you with some way to access it. Conversely, if you owe them money, you will still owe it even if they close their local branch.

If a local bank that is owned by a foreign bank must cease operations in that country, the assets and the liabilities of the legal entity will either be put into the recevership of the national government (nationalized) or be sold to another local entity.

This is if it is a licensed bank as a full entity (a bank corporation or the equivalent) and not a liscensed branch, which is not a fully legal entity.

As your country is not part of the EU or Euro framework yet, I would guess that you have few cases of just liscensed branches from other countries.

Just because the owner is foreign does not give it the ability to just move deposits out of the country of operations. Normally a bank operating in a national territory is obliged to be (except as the licensed branch which is usually highly restricted) a company established under the national laws and under the central bank regulation and oversight. People often mistakenly think that a BNP Paribas or a Citibank global is one entity and you can move your accounts from one nation to another just like that, but this is not the case, it is not a single thing.

this message is a reasonable example of what happens when a bank decides to exit a country

That this means is the Bank of Scotland decided to end its operations, but kept its legal entity operating to manage to the end the existing assets (the loans) of the Irish affiliate.

Here they were fully closing, Rabobank their operations so they needed to end their Liabilities in the country - the deposit. I would guess they had the arrangement to put into the escrow segregation the unclaimed deposits (which are the liabilities for a bank to the depositors) with the irish central bank.

It is not just in general, it is period if it is a local legal company, contre a licensed branch (which is not a local company, so you are possibly putting your money into a foreign company, not a local company that is owned by a foreign company, a very big difference).

The question of the Currency is not the key important question first, it is the question of
(1) Bank or
(2) Branch

if it is the liscensed branch - which is the case where the foreign bank does not etablish a local bank corporation but only a succursal, and there is no locally incorporated legal person operating, then the Citibank has the control of the disposition of these accounts in some fashion (depending if they are held on shore in country or not, dpending on the currency regime).

This is not correct.

If there is the EUR account in the local bank - foreign owned or not - it is a holding of the local corporation and it is fully under the control of the national authorities under the usual banking laws. The denomination of the account in the local currency or the foreign currency is only an accounting detail.

If it is a branch - not a full bank - of an Euro zone bank, then the EUR may in fact reside outside of the country and then yes, maybe there is a question of the control.

Of course if there are the sanctions and the EUR (or the other foreign currency) denominated accounts of the local banks can not be fully covered due to lack of access, that is another question.