Sberbank has agreed to sell its Slovak subsidiary to local financial group Penta Investments, the Russian state-controlled giant announced on December 17.

The announcement comes shortly after Sberbank Europe said it plans to close nearly a third of its branches in Hungary. The deal also confirms suggestions announced by the Russian bank in May that it could leave smaller markets.

Sberbank is reported to be struggling to fund growth at its EU subsidiaries amid sanctions that limit its access to international capital markets, but the Russian bank has consistently rejected such claims. It says any divestment is purely part of a plan to restructure international business activities.

Sberbank Europe signed an agreement on December 17 to sell its 99.5% stake in Sberbank Slovensko, to Penta, the Russian lender said in a statement. “The decision to sell Sberbank Slovensko is consistent with the strategic review of the markets in which Sberbank Europe operates,” it adds.

The selling price has not been revealed. The closing of the transaction is subject to approvals of the Slovak antimonopoly office and the European Central Bank.

The result of a long-held ambition to put its huge resources to work in CEE markets, Sberbank Europe was created in 2011, as the Russian state giant bought the nine-country network of Austria's Volksbank. However, it has struggled to gain traction.

Sberbank Europe saw deposits drop almost €400mn last year, with the most significant drain recorded in the Czech Republic and Slovakia. Net profit at the group fell by almost a fifth in 2014.

The difficulties have only expanded as Sberbank struggles for funding under international sanctions, making it tough for the bank to offer its European network support. That has resulted in speculation that some units could be offloaded.

Reports in local media have been suggesting in recent months that Slovak investment group J&T and the local unit of Belgian-owned bank CSOB were also in the race for the bank. Italy's UniCredit and Hungary's OTP were also mentioned.

Hospodarske Noviny claimed in August that the closely-held Penta investment group had been trying to convince Sberbank to do a straight deal for the unit. The closely-held financial group had earlier refused to rule out whether it was interested.

The CEO of the Slovak unit of Sberbank tried to dissipate the rumours about a possible sale in September, claiming the Russian bank will remain in Slovakia. Indeed, he suggested Sberbank Slovensko could look at further acquisitions in the country should EU sanctions be lifted. 

Meanwhile, the closures in Hungary only add weight to speculation that the Russians would also like to sell up in that country also, although the announcement was accompanied by references to long term growth.

For Penta, the acquisition represents an opportunity to expand its presence on the banking market. The group already owns two other Slovak banks - Primabanka Slovensko and Privatbanka. In Slovakia, Sberbank has a market share of around 4%.