Sberbank of Russia

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Coordinates: 55°41′55.69″N 37°34′45.54″E / 55.6988028°N 37.5793167°E / 55.6988028; 37.5793167

Sberbank
Сбербанк
Type Public (OAO)
Traded as MCXSBER
Industry Banking, Financial Services
Founded 1841 (de jure 1991)
Headquarters Moscow, Russia
Key people Sergey Ignatev, (Chairman)
German Gref, (CEO)
Products consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, savings, Securities, asset management, wealth management, Credit cards
Revenue Increase US$ 30.5 billion (2012)
Net income Increase US$ 11.4 billion (2012)
Total assets Increase US$ 486.4 billion (2013)
Owner(s) Central Bank of Russia 51% Listed 49%
Employees 286,019
Subsidiaries Troika Dialog
Website www.sbrf.ru
Not to be confused with Sberbank of the USSR.
For other uses, see Sberbank (disambiguation).

Sberbank Rossii (Russian: Сбербанк России, a contraction of "сберегательный банк" - sberegatelʹnyĭ bank; English: "Savings bank of Russia") is the largest bank in Russia and Eastern Europe, and the third largest in Europe.[1] In July 2014 Sberbank was ranked 33rd in the world and first in central and eastern Europe in The Banker's Top 1000 World Banks ranking.[2] The company's headquarters are in Moscow and its history goes back to Cancrin's financial reform of 1841.[3] The bank offers a full range of savings, investment, and lending services. Motto: всегда рядом (vsegda ryadom) - Russian for "Always by your side".[4]

History[edit]

Pre-revolutionary period[edit]

Sberbank logo before 2009

Emperor Nicholas I established the first private savings institutions in Russia in 1841 when he approved a statute "for the purpose of providing a means for people of every rank to save in a reliable and profitable manner". The next year, savings offices opened in the state treasury departments in Moscow and St. Petersburg. Over the next 20 years, about 45 such offices opened in nearly all of Russia's regional capitals. The State Bank of Russia, or Gosbank, was formed in 1860 and the savings offices were soon transferred under its jurisdiction.

Early Soviet period[edit]

By 1924, the chervonets pushed out the old Soviet banknotes and became the sole currency. The State Bank of the USSR, or Gosbank, was established in 1923 and the network of savings banks was reconstituted. Encouraging savings was a government priority in the late 1920s. The state targeted the general public with the magazine Sberegatelnoe Delo, or "Savings Business", which contained articles by leading government planners.

Control of savings banks was transferred to the People's Commissariat of Finance in 1929. The first Five-Year Plan of 1928-32 set ambitious targets for the promotion of personal savings, but the plan was only about 50% fulfilled because few people had any money to save. The situation improved under the second Five-Year Plan. Total deposits grew five times between 1935 and 1940 and reached prewar levels. Meanwhile, the Credit Reform of 1930-32 led to the formation of a system of specialized banks under Gosbank, each with a particular sphere of responsibilities. This system remained basically unchanged through most of the Soviet period.[5]

The savings banks played a large role in funding Soviet involvement in World War II. Not only did they provide loans to the war effort, they also accepted donations from the populace for the defense effort and sold tickets for government-run lotteries that raised money for the war. A rationing system was in place during the war; in 1947, it was repealed and a money reform was carried out in which ten old rubles were exchanged for one new ruble. Those who put their money in savings banks, however, enjoyed a more favorable exchange rate. The network of savings bank branches, which had fallen by half during the war due to occupation of Soviet territory, returned to prewar levels by 1952. There were about 42,000 branches in all. They remained under the jurisdiction of the Ministry of Finance, with soviet committees supervising local offices.

1960s: Incorporating Sberbank into the Gosbank[edit]

Savings offices were transferred to Gosbank, the state bank, in 1963. Gosbank now operated as simply an extension of the government's monetary and economic policy. It carried out all the functions of a central bank as well as a commercial bank: printing money, controlling the money supply, providing credit for industrial enterprises, operating private savings accounts for individuals, and taking care of the accounting and money transfer needs of the federal budget. Citizens brought their money to Gosbank's savings offices because they had no other option. In 1965, economic reforms were implemented to improve planning and make industry more responsive to demand, but the banking system remained fundamentally unchanged.

1985-1990: Perestroika[edit]

In the mid-1980s, Mikhail Gorbachev launched a policy called perestroika which was economic restructuring; Deposits at savings institutions began to increase and a major reorganization of the banking system was implemented in 1988. Gosbank was turned into a central regulatory institution, while five separate banks were created specializing in particular economic spheres such as foreign trade, agriculture, and loans to industry. One of the newly created banks was Sberbank, responsible for operating a savings and loan system for workers and average citizens. Sberbank was structured as an umbrella institution for the fifteen savings banks of the USSR's republics.

Dissolution of the USSR[edit]

ATM of Sberbank in Tolyatti

In 1990, as the Soviet Union was falling apart, Boris Yeltsin, president of the Russian Republic, signed a presidential decree declaring the Russian Republic Savings Bank (a unit of Sberbank) to be the property of the republic.[6] Yeltsin worked with the bank's chairman, Pavel Zhikarev, to privatize the Russian Sberbank in 1991. It was organized as a joint stock company comprising about 76 regional banks, each with its own particular way of operating. Price controls on consumer goods were removed in 1992, leading to rapid inflation; Sberbank froze depositors' accounts early that year to prevent further growth in the money supply. In 1993, Zhikarev, who had been the bank's chairman for 25 years, was replaced by the deputy chairman Oleg Yashin. The Russian Central Bank acquired a majority stake in Sberbank by 1993. The Central Bank and the Finance Ministry made attempts to acquire nearly full control over Sberbank in the early years of its existence, but in the end parliament determined that it should remain an independent entity. Full privatization was postponed indefinitely in 1995 when rumors surfaced that a Russian tycoon with a failed bank in his past was planning to gain control of Sberbank.[6]

The newly privatized Sberbank was a sprawling entity with over 20,000 branches and nearly 90% of household savings. Although it paid interest rates that were often lower than the rate of inflation, Russians who wanted a bank account continued to deposit their money in the familiar institution. Many citizens preferred to keep their savings at home in US dollars. Sberbank was saddled with some unprofitable operations, such as the processing of payments for public utilities and the operation of branches in provinces that were served by no other bank.

Meanwhile, during the 1990s, Sberbank was modernizing and adding services. It signed deals with Hewlett Packard and Unisys in 1994 to computerize all its branches and implement a central clearing system. Its first ATM opened that year at Moscow's Sheremetyevo airport. Sberbank was also remodeling some of its branches in marble and glass in order to dispel their reputation for dinginess. In the mid-1990s, the bank started construction on a lavish new headquarters in the center of Moscow.

1998 financial crisis[edit]

Amid the 1998 crisis, the Russian government introduced a program allowing depositors at the largest banks, such as Inkombank, SBS-Agro, MOST-Bank, and Menatep, to transfer their accounts to Sberbank and take advantage of the government deposit guarantee. However, dollar accounts would be transferred at an unfavorable rate based on the pre-crisis value of the ruble. Sberbank gained about 440,000 new accounts, moving its share of individual accounts to about 85% and of corporate accounts to 20%. After the crisis, Sberbank continued to shift its focus away from GKOs and toward investment in the private sector of the economy. Its loan portfolio increased between two and three times in 1999 as it lent large amounts to oil, natural gas, and mining concerns.[5]

Volksbank International acquisition[edit]

Russian President Putin visits a Moscow branch of Sberbank, November 2001

In 2011, Sberbank acquired Volksbank International AG from its shareholders Österreichische Volksbanken AG, BPCE, DZ Bank and WGZ Bank. The deal is including all VBI assets - banks in Slovakia, Czech Republic, Hungary, Slovenia, Croatia, Ukraine, Serbia and Bosnia and Herzegovina, but excluding Volksbank Romania. The agreed price is €585 to €645 million, depending on VBI business performance in 2011. VBI’s total assets (excluding Romania) was €9.4 billion in June 2011.[7]

Denizbank acquisition[edit]

8 June 2012 in Istanbul, Sberbank of Russia (“Sberbank”) and the shareholders of DenizBank AS (“DenizBank”) – Dexia NV/SA and Dexia Participation Belgium SA (together, “Dexia”) have signed a definitive agreement for the acquisition of 99.85% of DenizBank by Sberbank for a consideration in Turkish Lira of TRY 6,469 million (at the current exchange rates approximately EUR 2,821 million or US$3,504 million). This implies a valuation of Turkish Lira 6,479 million for 100% of DenizBank’s share capital. The transaction includes DenizBank and its subsidiary companies in Turkey, Austria and Russia. The agreed purchase price is equivalent to 1.33x DenizBank’s shareholders’ equity as of 31 March 2012 and is subject to adjustments at closing.[8]

Ownership[edit]

Bank cards (Visa and MasterCard) with private information removed

A majority shareholder of Sberbank is the Central Bank of the Russian Federation, also known as The Bank of Russia, owning 50%+1 share of Sberbank's voting shares[9] with the rest of the shares dispersed among portfolio, private and other investors with an estimated shareholding of about 20% by foreigners.

Russia's central bank cannot sell down its stake further without a change in Russia's laws.

Management[edit]

The Chairman of the Board and Chief Executive Officer (CEO) is German Gref, confirmed by the Board of Directors on 16 October 2007.

Key statistics[edit]

The bank has approximately 20,000 branches with 242,000 employees.

Largest financing projects[edit]

The Bank's largest ten borrowers received RUB 297 billion in 2004. Known projects include:

  • GT TEZ Energo (construction of gas turbine electric power plants)
  • Sevmorneftegaz (Gazprom's subsidiary owning licenses for the Shtokman field and to develop the Prirazlomnoye oil field)
  • Sayanskhimplast (chlorine and caustic soda production facilities improvements)
  • The "Svyazinvest's 2004 investment programme"
  • Ilyushin Finance Co. (lease for three aircraft)
  • Delta Telecom's (St. Petersburg cell network)
  • Sukhoi's Su-35 project (long-term funding of the production)[10]
  • Funding of the Khmelnitsky nuclear power plant in Ukraine for finishing blocks 2&3 until 2016

Export Credit Agencies relationships[edit]

Sberbank signed cooperation agreements with several Export Credit Agencies (ECAs) in 2004 including Eximbank USA, Eximbank Hungary and the Israel Foreign Trade Risks Insurance Corporation. Sberbank has also cooperated with OeKB, ECGD, Euler Hermes, SACE, CESCE, EDC (Canada), Atradius (Netherlands), KUKE (pl) (Poland), COFACE (France), Finnvera (fi) (Finland), EGAP (Czech), EKN (Sweden), ERG (Switzerland), NEXI (Japan) and Japan Bank for International Cooperation.

Subsidiaries[edit]

Sberbank Rossii's office in Atyrau, Kazakhstan

See also[edit]

References[edit]

  1. ^ FT Lex (September 17, 2012). "Sberbank – the consumer’s choice - FT.com". Financial Times. Retrieved 23 September 2012. 
  2. ^ "Top 1000 World Banks – Sales bring changes in CEE but Russia still rules". The Banker. June 30, 2014. Retrieved 11 October 2014. 
  3. ^ "Sberbank of Russia - About Sberbank". Sbrf.ru. 2013-11-01. Retrieved 2014-03-21. 
  4. ^ "Sberbank of Russia". Sberbank.ru. Retrieved 2014-03-21. 
  5. ^ a b A Fistful of Rubles: The Rise and Fall of the Russian Banking System
  6. ^ a b Russia: The Banking System During Transition (World Bank Studies) by Ruben Lamdany
  7. ^ "Sberbank completes Volksbank buy". RT. 2011-09-09. Retrieved 2014-03-21. 
  8. ^ Sberbank Announces Agreement to Acquire 99.85% of DenizBank[dead link]
  9. ^ Sberbank shareholders, official website: http://www.sbrf.ru/moscow/ru/investor_relations/information_for_shareholders/share_capital_structure/
  10. ^ "Sukhoi’s Su-35S program to be funded by Sberbank". Defence Aviation. 20 September 2010. Retrieved 21 September 2010. 
  11. ^ Klimentev, Gleb (2009-12-10). "Сбербанк открыл ячейку в Белоруссии". gazeta.ru. Retrieved 2009-12-11. 
    • Sberbank Rossii (Kazakhstan) (former Texakabank)
    • Sberbank Rossii (Ukraine) (former NRB)

External links[edit]