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VTB Capital, the London-based investment banking unit of sanctioned Russian bank VTB, is on the brink of a default, reported Sky News.

The unit is facing insolvency proceedings after sanctions over Russia’s invasion of Ukraine made it difficult to operate in the city.

VTB’s assets were frozen by Britain shortly after Russia’s ‘military operations’ in Ukraine in a bid to stop the lender from amassing money in London.

The banking regulators in the UK have now brought on board advisers to help proceed with VTB Capital’s insolvency, the report said citing unnamed banking industry sources.

The unit could be placed under a special administration or fall into a liquidation process this week itself.

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The sources also said that the regulators have appointed insolvency practitioners to oversee the process.

VTB Capital’s potential default has been expedited by a move by the clearing banks, such as HSBC, to cut its ties with the firm in line with the actions ordered by the UK’s Office of Financial Sanctions Implementation.

VTB did not respond to Sky News’ emailed request for comment.

Last week, Reuters reported that VTB is winding down the unit after laying off some of its staff in the prior weeks.

VTB Capital, which had about 400 staff in London in 2014, cut its employee headcount to around 150 over the years.

Earlier this month, a report by Financial Times said that VTB was exploring an exit from Europe after its assets were frozen by the US and its allies in the wake of the Ukraine crisis.

It was also reported that Germany was seeking to divest the local arm of the bank in a bid to prevent triggering the country’s deposit insurance scheme.