Sberbank Enters Eastern Europe Via $661 Million VBI Deal
OAO Sberbank (SBER), Russia’s biggest lender, acquired Volksbanken International AG at a knockdown price after VBI shareholders injected additional equity to compensate for losses after the deal was agreed.
Sberbank bought VBI for 505 million euros ($661 million) from Oesterreichische Volksbanken AG (VBPS), DZ Bank AG, WGZ Bank AG and Groupe BPCE after signing the deal on Sept. 8, the Moscow- based bank said today in a statement. The closing price was reduced from a 585 million-euro to 645 million-euro range agreed at the signing. In addition to the price cut, VBI’s shareholders also injected 80 million euros into the unit.
“We are considering further potential acquisitions in the countries where we will be present,” Sberbank Chief Executive Officer German Gref said at a press conference in Vienna today, adding that the bank was in “no rush.” VBI’s network of banks has a footprint in the Czech Republic, Slovakia, Hungary and most of the former Yugoslavia and Sberbank would also be interested in banks in Poland and Turkey, he said.
Sberbank is seeking growth opportunities outside of the former Soviet Union as some western European lenders sell their subsidiaries in eastern Europe and Turkey to comply with capital rules or state aid conditions.
The Russian bank sought to lower the price tag because of losses caused by Hungary’s foreign-currency loan law, Volksbanken said in a separate statement today. The cut is an additional reduction from a preliminary agreement in July to pay 670 million euros for VBI, which comprises nine banks in eight countries in eastern Europe.
Failing to Repay
Volksbanken’s Sberbank sale is part of a restructuring that was required to exempt Volksbanken from stricter capital rules issued by the European Banking Authority, which had found a capital shortfall of 1.05 billion euros at the lender. Volksbanken expects to report a 2011 loss of at least 825 million euros.
The sale of assets to Sberbank improves its capital ratio by 2 percentage points by reducing risk-weighted assets, Volksbanken said in a statement today. VBI’s shareholders injected 80 million euros into the bank before the sale to cover “potential risks, which are mainly due to the problems in Hungary,” Volksbanken said.
The acquisition is “not material enough for us” to require additional funding, Sberbank Chief Financial Officer Anton Karamzin told analysts in November.
Sberbank is seeking growth opportunities outside of the former Soviet Union as some western European lenders sell their subsidiaries in eastern Europe and Turkey to comply with capital rules or state-aid conditions. Its “strategic goal” is to compete with companies including Raiffeisen Bank International AG and UniCredit SpA across central and eastern Europe, Gref said in an interview on April 15.
The Russian lender is “carefully watching” potential takeover targets in Turkey and Poland as they arise, Karamzin said in November.
‘Rather Questionable’
“The merits of VBI as an entity are rather questionable,” Renaissance Capital analysts led by Svetlana Kovalskaya wrote in an e-mailed report. “However, this deal is ultimately too small to make a difference to Sberbank right now.”
Sberbank is taking over 2.1 billion euros of funding for VBI, while Oesterreichische Volksbanken will provide a five-year loan of 500 million euros to Sberbank, according to the statement. Volksbanken owned 51 percent of VBI, DZ and WGZ owned 24.5 percent and BPCE the remaining 24.5 percent.
Sberbank closed up 0.7 percent to 97.06 rubles in Moscow.
Societe Generale SA and JPMorgan Chase & Co. acted as advisers to Sberbank, according to an e-mailed statement from the two banks. Troika Dialog, which was acquired by Sberbank in January, also advised on the deal. Ithuba Capital and Deutsche Bank AG acted for Volksbanken.
Gref said he was appointing Austrian industrialist Siegfried Wolf, chairman of Russian Machines, as chairman of VBI. He said that other management changes weren’t imminent.
Sberbank can continue to use the Volksbanken brand until the end of the year, said Michael Mendel, a board member at the Austrian lender.
To contact the reporters on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net; Boris Groendahl in Vienna at bgroendahl@bloomberg.net
To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net
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