Russia's Sberbank aspires to largely expand in the CEE region

OAO Sberbank, Russia’s biggest lender, is aspiring to become a regional player, where lenders worth as much as €9 billion ($13 billion) may go on sale in the coming years, reported Bloomberg.

Sberbank agreed on July 14 to buy a network of nine small banks in countries including Hungary, the Czech Republic, Slovakia, and most of the Balkans from Austria’s Oesterreichische Volksbanken AG. Chief Executive Officer German Gref said this was only the first step in making Sberbank a “global bank” by using the new group as a platform for further acquisitions in eastern Europe and Turkey. “There is something changing substantially and Sberbank’s acquisition of VBI is part of it,” said Hugo Swann, a banking analyst at Credit Suisse AG.

Volksbanken was a unique opportunity for Gref to match at least their geographic footprint and establish a base for further expansion. With banks including KBC Groep NV (KBC), Banco Comercial Portugues SA (BCP) and Hypo Alpe-Adria-Bank International AG potentially selling assets from Poland to Serbia, he will have plenty of options to tuck into more deals, Bloomberg wrote.

Sberbank’s Gref, who has hired former UniCredit CEO Alessandro Profumo to advise on his expansion in the region, told reporters in Moscow that the Volksbanken purchase was his “first step in transforming Sberbank into a global bank.” Apart from eastern Europe, he’s also targeting Turkey, Gref said.

Deals may follow

The possible sellers in the region include those looking to bolster their finances as they face the challenges of their home countries’ escalating debt. That, along with the need for some to repay bailout funds or meet state aid conditions imposed by European Union regulators, may spur deals.

Transactions will mostly be led by either a change in the strategy of the acquiring bank linked to a decision to enter the region or macroeconomic pressures in the parent company’s country, said Artur Tomala, who heads central and eastern European operations at Goldman Sachs International.

On top of that, big participants present in many of the region’s countries such as UniCredit or Raiffeisen are already reviewing their operations, and may sell units that lack scale, Credit Suisse’s Swann said.

For Sberbank, which has been busy managing the rapid growth in its home market followed by the financial crisis in the last decade, the region now offers the potential to boost earnings, said Vladimir Savov, a banking analyst at Otkritie Financial Corp. in Moscow.

VTB, Russia’s second biggest lender, that operates in Belarus, Ukraine and Serbia, does not plan to boost its presence in eastern Europe at least in the next two years as it seeks to concentrate on strengthening its existing operations, said Ekaterina Petelina, head of strategy and corporate development at VTB Group in Moscow.