Russia’s Sberbank makes £5.5mn injection to boost struggling London unit

Russia’s Sberbank makes £5.5mn injection to boost struggling London unit
By Jason Corcoran in London November 22, 2016

Russian state-owned lender Sberbank has pumped £5.5mn (€6.5mn) into its London investment bank to boost a business reeling from sanctions and a costly sexual discrimination case.

Sberbank, Russa’s biggest lender, provided the additional capital to its UK Sberbank CIB subsidiary on April 4 this year, according to a regulatory filing made late last month with UK Companies House.

“The purpose of this injection was to continue to support the company’s capital base and ensure that sufficient regulatory capital buffers were maintained,” Sberbank said in the filing. “The company maintains sufficient capital that enables it to comply with the regulatory requirements of the UK Financial Conduct Authority. The company met its regulatory capital resources requirement throughout the year.”

The bank, which is fronted by President Vladimir Putin’s former economy minister Herman Gref, said in the filing that it has cut headcount, simplified the business model, and reduced external legal and consultancy costs as “various other projects were closed”.

Sberbank, which controls about 46% of Russia’s deposits and a third of the nation’s loans, has had a torrid time in the UK over the past two years.  The business was cut to the bone following a quadrupling of losses in 2014 and a record $5mn sexual discrimination award to former equity saleswoman Svetlana Lokhova.

Lokhova was taunted by her London colleagues with unfounded allegations and driven to a mental breakdown, the tribunal ruled. Lokhova later passed a drug test taken at her insistence, while the UK Tribunal ruled that then UK boss Paolo Zaniboni had victimised her by failing to discipline the London-based bankers who bullied her. An employment tribunal eventually awarded the former saleswoman £3.2mn after finding she had been a victim of harassment, victimisation and discrimination amounting to constructive dismissal.

The latest filing indicated that the case with Lokhova had finally been closed. In January, Lokhova said she had launched a separate High Court libel case against two of her former co-workers David Longmuir and Piotr Tymula over comments they made in emails to other colleagues.

Sanction effects

Sberbank, like most Kremlin-controlled lenders, was sanctioned by both the US and the EU over Russia’s involvement in the Ukrainian conflict. Sanctions do not prohibit clients from trading with Sberbank, but they do restrict investors from accessing debt and equity financing from these lenders with a maturity of longer than 30 days. To compound matters, many leading UK, European and US fund managers opted to sever trading lines entirely with Sberbank for fear of incurring the wrath of Wall Street regulators

In 2014, the troubled business also received £4mn from Sberbank CIB’s Cypriot unit “as compensation under the terms of fixed income transfer pricing arrangements”. These funds were supposed to be repaid when future profits from the fixed income business were big enough to make the repayment. The amount was fully repaid in October 2015, according to the filing.

The latest accounts filed in late October show that losses for 2015 stood at £386,000. The loss for 2014 was restated at £9.1mn

Revenues jumped 76% during the year thanks to a revival in Russia fixed income. Sberbank CIB said its UK business recorded a remarkable 3,905% jump in revenue from fixed income while revenue for the equities part fell by 28%.  

The number of employees at Sberbank’s London office shrank to 30 from 37 in 2014.   Remuneration for directors also dropped to £754,000 from £1,061,000. The highest-paid director earned £422,000 compared to £626,000 in 2014.

In March, Sberbank axed its UK chief executive Zaniboni who had run the operation since 2009. He has been replaced on an interim basis by chief operating officer Adam Jesney, according to the filing.

Sources close to the bank told bne IntelliNews earlier this year that Sberbank boss Gref may soon pull the plug on its costly London and Wall Street operations.

The writing has effectively been on the wall since mid-March, when Gref told Bloomberg that investment banking is “not our strategy in the long term”, because it's not growing as fast as the bank’s retail or corporate units. Gref has soured on investment banking since paying Armenian banker Ruben Vardanian and his colleagues more than $1bn in 2011 for Troika Dialog. The business was later rebranded Sberbank CIB.

bne IntelliNews reported exclusively in February that Gazprombank, Russia's third-largest lender, was winding up its London business after it, like Sberbank, was sanctioned by the US and EU over Russian military adventurism in Ukraine. 

Sberbank, meanwhile, cancelled its annual investor forum in Moscow and has been cutting its headcount in both London and Moscow as trading has dried up. 

“For many clients, the backdrop of the sanctions has led to a soft embargo where it’s regarded more prudent to avoid transacting in Russian markets or with Russian-owned counterparties than to risk falling foul of the sanctions framework,” the former UK head Zaniboni said in a filing late last year. 

Meanwhile, some of Sberbank’s investment banking team in Moscow have been reassigned to focus on Russia’s regions. 


Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.