OAO Sberbank, Russia’s biggest lender, is taking advantage of the retreat by western lenders in Turkey and Eastern Europe to expand, according to Deputy Chairman Anton Karamzin.
The Moscow-based lender began talks to buy Denizbank AS (DENIZ) in Istanbul from Dexia SA (DEXB), the Franco-Belgian lender said on May 24. Citigroup Inc. said on the same day it is selling a 10.1 percent stake in Turkey’s Akbank TAS (AKBNK) for $1.15 billion to a group of investors it didn’t identify, according to a statement from the New York-based bank.
“Some of the European and international banks are forced by their capital and liquidity positions and regulatory requirements to reshape their geographic coverage in favor of their core market places,” Karamazin said.
Sberbank is seeking growth outside the former Soviet Union as western European lenders sell subsidiaries in eastern Europe and Turkey to comply with capital rules or state-aid conditions. It acquired most of Oesterreichische Volksbanken’s eastern European business for 505 million euros ($635 million) in February to expand in the region.
Dexia, based in Paris and Brussels, put Denizbank up for sale as part of a rescue plan imposed by the French and Belgian governments when the debt crisis eroded its access to funding. The sale came amid decisions by lenders such as Deutsche Bank AG and France’s Societe Generale SA to dispose of more than $1 trillion in assets, loan portfolios and units to raise cash, according to data compiled by Bloomberg, creating a surge in available banking assets.
“Our interest in Denizbank, which is in the top 10 in Turkey, is based on the premise that you have to have some scale there to be successful as it’s a very competitive market,” Karamzin said. “Eastern Europe is an attractive market that will offer growth and profitability opportunities for us so in case of VBI it was logical for us to enter now because things are cheap now but haven’t degenerated from the crisis to the point it would be easier to build banks than to buy them.”
Sberbank may pay as much as 1.5 times Denizbank’s book value, valuing the bank at about $4 billion, said a person close to the deal, who declined to be identified as the process is private. Denizbank had a book value of about $2.7 billion at the end of the first quarter. Karamzin declined to discuss price as negotiations are continuing.
A deal would be “credit positive” for both Sberbank and Dexia, according to Eugene Tarzimanov, a senior analyst at Moody’s Investors Services. It would reduce Sberbank’s reliance on its domestic market and create a platform for expansion in a market that offers “long-term growth potential,” Tarzimanov wrote in a report today.
The bank should reach its five-year target of earning 5 percent of profits from overseas operations by the end of 2013, Karamazin said. It also has “some interest in Poland” even if it hasn’t identified any targets, he said.
Sberbank bought a 93.3 percent stake in Belarusian BPS Bank for $280.8 million in 2009. The 171-year-old lender also has an office in Germany, a branch in India and is building a foothold in China, according to its website.
Sberbank and VTB Group, Russia’s second-biggest lender, have increased their share in their domestic retail market over two years as Barlcays Plc, HSBC Holdings Plc (HSBA) and Banco Santander SA (SAN) exited. Sberbank, with slightly less than 50 percent of all deposits in Russia, acquired Moscow brokerage Troika Dialog in January to expand into investment banking.
Sberbank’s shares climbed as much as 2.2 percent today and were 0.5 percent higher at 80.42 rubles ($2.52) by 4:11 p.m. in Moscow. Denizbank’s shares plunged 10.56 percent to 12.7 liras ($6.92) in Istanbul after tumbling 20 percent on Friday.
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