Sberbank remains in talks over the price for the acquisition of a 51% stake in Volksbank International, with Sberbank Chairman Herman Gref expecting a decision by the end of July.
Austria’s Oesterreichische Volksbankhas announced the sale its 51% stake in of VBI and its leasing business in December 2010. The remaining shares are divided between Germany’s DZ-Gruppe and the French group Banques Populaires.
According Sberbank Chairman, German Gref, the parties are still in talks over price which has already reduced from 1 billion Euro to 590 million Euro.
“Sberbank is interested in Western and Eastern European markets. We have started the negotiations with the Austrian banks and are still in the process to obtain the right decision. We expect the deal to take the decision by the end of July.”
VBI has operations in Slovakia, Czech Republic, Hungary, Slovenia, Ukraine, Croatia, Romania, Serbia, and Bosnia-Herzegovina. The bank operates 547 branches with 5.299 employees. VBI’s Romanian operations, 35% of VBI total assets are excluded from the deal. The bank lost 22.4 million Euro in 2010 mostly due to increased cost of risk.
Rustam Botashev, CFA at Unicredit Securities, says VBI is a loss-making business and does not have a significant value for Sberbank
“We estimate that Sberbank might buy VBI at 0.84X P/BV 2010. Assuming that Romania’s share in VBI equity equals its share in assets, we arrive at 702 million roubles for VBI equity excluding Romania. If the deal goes through at 590 million Euro for 51% of the bank, the P/BV would be 1.64X. We think that Sberbank has great potential to develop domestically and do not favor its international expansion. However, given the size of VBI, the acquisition would be not significant relative to Sberbank. VBI (excluding Romania) equity represents around 2.5% of Sberbank’s equity. We hope that Sberbank will make no further acquisitions in the next few years before it fully integrates VBI and explores potential synergies.”
At the moment, Sberbank has no major foreign assets. The Bank is represented in only three countries of the CIS. Sberbank plans to obtain 5-7% of profits through its foreign affiliates.