Business & Industry
Dec 1, 2014
Sberbank is Russia's oldest and largest bank. It is particularly dominant in the field of individual savings accounts, holding about 65 percent of household deposits nationwide.
With more than 20,000 branches, its network pervades Russia's far-flung territory from the commercial center of Moscow to small provincial villages where it is often the only bank available for individual savers.
Sberbank is the successor to the savings division of the Soviet central bank, which in turn traces its roots back to a network of private savings institutions that was created by tsarist decree in 1841. Sberbank was privatized in 1991 but retains close ties to the central government. More recently, Sberbank has been transforming itself into a universal commercial bank and a prime source of finance for Russia's large oil and natural resources enterprises. The bank now offers a full range of savings, investment and lending services. Over the past several years, Sberbank had been closing unprofitable branches in smaller communities and brought its total network to under 20,000 in 2001. Also that year, a controversial share issue led to a minority shareholder rebellion. William Browder of Hermitage Capital Management claimed that the proposed 35 percent capital increase would dilute shareholder value while offering shares far below book price. Nevertheless, Sberbank disregarded calls for an extraordinary general meeting and moved ahead with the issue
Since 2000, the Central Bank had been discussing a bank reform that would institute deposit insurance for all banks, cutting back on Sberbank's powerful monopoly. Intense negotiations led to agreement by 2002 on how such a system would be organized, but the scheme failed to pass in the 2003 session of parliament. In 2003, a dispute erupted involving criticisms made by Vadim Kleiner, one of Sberbank's independent directors. Kleiner was the head of research for Hermitage Capital Management, which was known for an 'activist' stance on corporate matters. In a presentation at a London banking conference, Kleiner claimed that Russian citizens were in effect subsidizing the country's wealthiest businesses, since Sberbank paid very low interest to account holders and then made loans to companies like Gazprom, Rosneft, Lukoil, and Russian Aluminum below the market rate. He also asserted that Sberbank was inefficient and overstaffed. Even though his comments were based on Sberbank's own reports, the bank sued Kleiner and the newspapers that published his comments. A higher court eventually ruled against Sberbank.
In late 2003, Sberbank placed a $1 billion Eurobond that was the first by a Russian company to receive an investment-grade rating. The bank's large cash reserves and government guarantee made an apparently reliable investment. Nevertheless, the makeup of Sberbank's loan portfolio remained the greatest concern for analysts as the bank entered 2004. The Moscow Times suggested that, due to its large number of private depositors, Sberbank had more money than it could lend responsibly and was pressured to make risky loans.The Central Bank pushed Sberbank to adhere to requirements related to diversification of its loan portfolio. Sberbank insisted that its loan portfolio was reasonable and that it had always followed diversification requirements. Russian citizens, meanwhile, were gradually putting more money in private banks even without a deposit guarantee, and Sberbank's share of household savings once again fell to under 70 percent. The bank's Concept of Development for 2000 to 2005 called for improvements in customer service.
The current Sberbank has almost nothing left to remind us of the savings offices, in the form of which the Bank functioned for such a long period of time. What really amazes is that Sberbank is barely recognizable from itself of just 10 years ago! The ability to change and move forward means that Sberbank is currently in an excellent condition. Being the oldest and the largest Russian bank does not stop Sberbank from competing openly and in good faith with other banking market players, keeping its finger on the pulse of financial and technological changes. Sberbank not only keeps up with modern market trends, but even remains ahead of them, confidently knowing its way around drastically changing technologies and customer preferences.
International network Sberbank today is a powerful modern bank which is rapidly becoming one of the major global financial institutions. Over recent years, Sberbank has significantly expanded its international presence. In addition to CIS countries (Kazakhstan, Ukraine and Belarus), Sberbank is present in nine countries of Central and Eastern Europe (Sberbank Europe AG, former VBI) and in Turkey (DenizBank). The DenizBank acquisition transaction was completed in September 2012 and was the largest acquisition in the Bank's 170-year history. Sberbank of Russia also has representative offices in Germany and China, a branch office in India, and operates Sberbank Switzerland AG. The year 2013 marked the official launch of the Sberbank Brand in Europe.
Sberbank today is the only Russian bank featuring in the World's Top 50 Biggest Banks. In the Top 1000 World Banks published by The Banker, Sberbank ranks 34th, rising 15 positions as compared to the previous year. Equally important that in this rating Sberbank ranks 1st in the world in ROA, 1st in ROE and 5th in asset/equity ratio. In 2013 Sberbank ranked 63rd in the most valuable global brands rating as published by Brand Finance.
The Sberbank brand was valued at USD 14.16 billion: having risen by almost USD 3.4 billion over one year. Thus, Sberbank is recognized as the most valuable brand in Russia.