With Sberbank having agreed on the main terms of its Volksbank acquisition, Business RT discussed the move and its implications for Russia’s largest bank with Richard Hainsworth, General Director of Rusrating.
Commenting on the deal German Gref, head of Sberbank, said that was the initial stage of its plan to become a global player.
“It’s our first step towards transforming Sberbank into a global bank. The decision was made based on our ambition to make 5 to 7% of our profits from overseas operations by 2014.The bank we are buying is in the fast growing Central and Eastern European region. We see the acquisition as a springboard for further expansion into Europe.”
RT: Does this acquisition make good strategic sense to you?
RH: “Certainly, it’s an interesting deal, in terms of Sberbank moving into a different market, going beyond the borders of Russia. Although we know that VTB has banks in other parts of the world, these banks such as what used to be called Moscow Narodny Bank and Eurobank in France – these were banks that were remnants of a Soviet banking system. So, one or two of the commercial banks did set up banks outside of Russia before the crisis. And VTB has recently set up branches in Vietnam and Shanghai. But Sberbank did’t have much outside of Russia. ”
RT: So, it’s playing catch up with VTB, right?
RH: “It’s not playing catch-up, that’s in a different sense. What it’s done it’s gone for another growing market, which is Eastern Europe. To some extent, one could say that Eastern Europe is a bit more like Russia and ex- Soviet Union than the markets in which VTB is working. ”
RT: Could Sberbank go further and compete with German and French giants?
RH: “I think that would be difficult. If we look at a long term perspective, which is 10 – 15 years, that’s definitely where they are aiming at. But initially, what they’ll have to do is to consolidate their management and their whole team to be a multinational, multicultural bank, as opposed to being simply a savings bank in Russia. ”
RT: Do you think there is a risk for Sberbank because it lacks this experience with managing an international bank?
RH: “There’s always a risk in any takeover, in any acquisition. There are going to be cultural differences between the buyer and what’s bought. And we also see this between Sberbank and Troika Dialog. Sberbank has just bought Troika, there bound to be differences, which are showing up. People have left Troika. But on the other hand Sberbank wanted to take Troika in in order to change itself. So, buying a piece of what essentially was an Austrian bank, but in the East European area, it’s buying in expertise it didn’t have. So, it does make sense and there’s the opportunity for expanding further if they can get this integration process right.”
RT: European banking is troubled by its exposure to government debt. Do you think, the timing of this deal makes sense?
RH: “I think, it’s absolutely perfect for Sberbank, because in a sense they are buying at the bottom of the market. We don’t know yet what the results are of the stress testing of Volksbank, which are due out today. But I wouldn’t be surprised to find that Volksbank was in a position where it was more in favor of getting rid of this unit than keeping it, which means that the sale price would have been lower on the side of Volksbank. So, Sberbank is buying in at a good time. It doesn’t appear that there are too many problems left in this East European region, but it does give it a footprint in the European Union, which then will allow it to open branches in other parts of the European Union. So, it’s a sort of toehold from which you can then spread to other countries.”