bne IntelliNews -
Russia's Sberbank is preparing to sell its Slovak and Hungarian units, Czech media reported on February 23, quoting unnamed sources. Russian largest bank had suggested in December that its strategy was set to change because of worsening market conditions.
In December, a source close to Sberbank told Reuters that it was looking to sell the two units but had no buyers. The state-controlled Russian bank does not plan to sell its operations in Czech Republic, Lidove Noviny reports, quoting unnamed sources.
"A deal is already being prepared in Hungary and Slovakia," one source told the newspaper. Alongside the Czech unit, the Hungarian and Slovak units make up the three largest businesses in the Sberbank Europe network.
It was claimed as something of a coup by Moscow when Sberbank bought the businesses of Volksbank in eight CEE countries: Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, Bosnia-Herzegovina, Serbia and Ukraine, in 2012. The bank had been looking to expand overseas to put to work its capital reaped from increasing dominance of its home market.
It was a strategy also driven by the push across the region by Russian corporate clients. It found little welcome in CEE, therefore the purchase from the Austrian bank - though small - was seen as a very positive step forward by the bank, even if analysts were unsure.
Now, however, with recovery from the crisis sluggish in the EU and funding hard to come by for Russian banks, Sberbank has had a change of heart. Earlier this year it denied claims that the ongoing sanctions against Russia would prevent it from increasing capital at its Hungarian arm. The Vienna-based Sberbank Europe will also face the challenge of European Central Bank stress tests from next year.
Sberbank CEO German Gref told the press at the end of last year that the bank's five-year strategy could be revised in mid-2015, as market conditions worsen and “crisis scenarios” become more likely. The former liberal economy minister said the bank will have to step up technical upgrades and cost-cutting measures.
Recently Moody's Investors Service warned that Russian banks will become loss-making in a protracted high interest rate environment, estimating that given the current key interest rate of 15% and the pace of bad loans growth, the banking sector will post RUB1tn of losses in 2015.
Three suitors are reportedly interested in the Slovak unit of Sberbank Europe. Local investment group Penta will go up against Italy's UniCredit and Hungary's OTP, sources told Lidove Noviny.
OTP has been working on expanding its regional market share via acquisition of smaller lenders. Last year, Hungary's biggest lender bought Banco Comercial Portugues's Romanian subsidiary Millennium Bank for €39mn and Banco Popolare Croatia for €14mn. It is also planning to buy Slovenia's Nova KBM (NKBM).
There are few potential bidders mentioned for the Hungarian unit in the latest report. However, portfolio.hu suggested earlier this year that Co-op Hitel - a financing company owned by the Coop group, which is reportedly close to the government - was close to gaining control the Sberbank unit.
However, it is the state that has been busiest buyer in Hungary lately. As part of its strategy to boost local ownership of the banking sector it has recently agreed to buy control or minority stakes in several lenders. Officials have claimed the government is not planning any more acquisitions of major banks, but have made no comment on the speculation over Sberbank Hungary.
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