The Swiss Financial Market Supervisory Authority, known as FINMA, will keep the ban on payments and transactions carried out by Sberbank (Switzerland) AG until Aug. 2 to protect its creditors.
The extension will defer any deposit obligations for the commodity trading finance bank, a subsidiary of the Russian lender. Sberbank Switzerland is also banned from making any transactions that are not required for its upkeep.
FINMA said in an online statement that its investigator will continue to operate while the suspension is active.
Sberbank Switzerland did not immediately respond to a request for comment.
The regulator first imposed measures against Sberbank Switzerland in March after Western countries sanctioned its parent company Sberbank in retaliation against Russia's invasion of Ukraine.
A FINMA administrator will continue to monitor the bank's financial stability. The official will ensure that all creditors are treated equally and guarantee the bank has an appropriate organizational structure.
Sberbank Switzerland is a commodity trade financing specialist with approximately 70 clients, focusing on international traders and Russian commodity producing companies.
The Swiss company held approximately three billion Swiss francs ($3.2 billion), and more than 500 million francs in capital, at the end of 2021, according to Sberbank.
The bank's European operations have been hard hit by sanctions since the beginning of the war in Ukraine, as they greatly restrict its access to markets and cash flows. Sberbank, whose majority shareholder is the Russian government, was forced to make two coupon payments in rubles on foreign currency Eurobonds in May because of the sanctions, which could be defined as a default.
The European Union announced on Tuesday that European Council leaders had agreed to cut Sberbank off from SWIFT, an international messaging network that allows banks to make cross-border payments for financial transactions. Sberbank would become the eighth major Russian bank to be cut off from the loan messaging network if the SWIFT ban is included in the finalized sixth package of EU sanctions.
Switzerland has already banned Sberbank from SWIFT, along with an array of other sanctions that include restricting its access to securities trades with Swiss banks, aligning it with the EU.
The Austria-based Sberbank Europe AG was shuttered less than a week after Russian troops crossed Ukraine's borders, after heavy cash withdrawals by account-holders forced it into insolvency.
--Additional reporting by Irene Madongo and Najiyya Budaly. Editing by Ed Harris.
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