Sberbank Poised for ‘07 High on Conversion Limit: Moscow Mover

OAO Sberbank rallied for a second day, helping lift Russia’s benchmark stock gauge as the country’s largest lender hit its depositary receipt conversion limit.

Sberbank surged as much as 2.2 percent in Moscow, trading up 1.9 percent at 109.80 rubles by 1:11 p.m and poised for the highest close since October 2007. The amount of shares traded was 36 million, equivalent to 43 percent of the three-month average. Sberbank increased 2.2 percent to $14.74 in London. The extra amount investors pay to hold the London-traded securities jumped to 13 cents, the highest since Jan. 31.

Bank of New York Mellon Corp. halted Sberbank’s depositary receipt program under which investors convert local shares into foreign-traded stock, according to a statement dated Feb. 5. Depositary receipts can only account for 25 percent of a company’s shares and 50 percent of its listed shares, under Russian regulations. Sberbank’s depositary receipts are equivalent to four ordinary shares.

“In the short term, this is bullish news for the shares,” Mark Rubinstein, head of research at IFC Metropol, said by e-mail from Moscow. “London investors are forced to buy the stock from the ones that have already been converted while Moscow investors are hoping that the program will re-open soon.”

Sberbank has the largest weighting on the benchmark Micex Index at 15 percent. Sberbank said on Jan. 31 its depositary receipt program had “nearly reached the current overall limit for creating DRs,” according to a website statement.

The lender has jumped 18 percent this year in Moscow, while adding 20 percent in London. The Micex Index gained 0.7 percent to 1,551.76. Sberbank led the gains on the Russian Depositary Index.

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