Sberbank to Buy Austria’s Volksbank

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Feb. 16 – OAO Sberbank closed a US$661 million deal to buy the international arm of Austria’s Volksbank International AG (VBI) on Wednesday.

The Volksbank acquisition will serve as a springboard for further expansion in Europe, RIA Novosti quoted Sberbank CEO German Gref as saying in Moscow.

Russia’s biggest lender bought VBI from Oesterreichische Volksbanken AG, which owned 51 percent of VBI, while France’s Banque Populaire Caisse d’Epargne and Germany’s DZ Bank/WGZ Bank own 24.5 percent and Groupe BPCE owns the remaining 24.5 percent.

VBI is Austria’s fourth-largest bank after Bank Austria, Erste Bank and Raiffeisen Bank, and received a total 1 billion euros in aid as part of a 100-billion-euro state bailout for the entire banking sector in the wake of the 2008 Global Financial Crisis.

Despite previous assertions that the purchase price was fixed at US$788.6 million, Sberbank said in a statement that it had succeeded in negotiating a discount. Moreover, before the sale, VBI shareholders injected US$104.5 million in additional equity to cover “potential risks, which are mainly due to the problems in Hungary,” Volksbanken said.

Originally the deal was announcement on September 8, 2011. German Gref, who owns US$1.4 million in Sberbank stock, then admitted that Sberbank’s move into Europe was premised on the continent’s financial woes.

Volksbanken’s Sberbank sale is part of a restructuring that was required to exempt Volksbanken from stricter capital rules issued by the European Banking Authority, which had found a capital shortfall of 1.05 billion euros within the lender. Volksbanken expects to report a 2011 loss of at least 825 million euros.

VBI is present in the Czech Republic, Slovakia, Hungary, Croatia, Bosnia and Herzegovina, Slovenia, Romania and Ukraine. The Romanian subdivision was excluded from the deal because of the high risk levels in its portfolio. Without Romania, VBI has about 600,000 clients and 295 branches.

Sberbank will continue to use the Volksbanken brand until the end of the year, but from 2013 it will start to operate under its own name, Gref told reporters.

“Sberbank has a unique position to open up potential growth in the countries of Central and Eastern Europe,” Gref said in a statement. “From VBI’s base, Sberbank will build a platform for organic and inorganic growth.”

Gref also said Poland and Turkey are particularly interesting markets for Sberbank as well. Sberbank is targeting 5 percent to 7 percent of its revenue to come from foreign operations by 2014.

At the moment, Sberbank has no major foreign assets. Sberbank, whose US$318 billion in assets account for one-third of Russia’s overall banking system, is operating in only three countries of the CIS — Kazakhstan, Belarus and Ukraine.