A Lucky Moment for Sberbank’s Privatization

On 17 September 2012, it was announced that the Bank of Russia was to sell a stake in Sberbank. At present, Sberbank's charter capital consists of 21,586,948 thousand ordinary voting shares and 1,000m preferential shares. The Bank of Russia owns 13,006,469 thousand ordinary voting shares in Sberbank, or 57.58% of the charter capital, or 60.25% of the voting shares.

 

A total of 1,712,994,999 of shares were offered for sale, which amounts to 7.58% of the charter capital or 7.94% of the voting shares. Thus, the Bank of Russia will stay in control of Russia's biggest bank, because its stakes both in the charter capital and the voting stock will remain in excess of 50%.

The moment for Sberbank's next SPO was evidently chosen in response to the latest monetary policy developments in the USA and Europe. In early September the European Central Bank (ECB) announced its program for buyout of the government bonds issued by the Eurozone countries. And a week later (on 13 September) the US Federal Reserve announced a third round of a quantitative easing, or QE3, setting its monthly norm for bond purchases at $ 40bn.

 

On Monday, the closing price of Sberbank's ordinary shares on the MICEX was Rb 95.57. Given that price, the Bank of Russia's proceeds from the placement of that block of shares will amount to Rb 163.7bn. In any event, the price of placement will be no less than Rb 91 per share, and total proceeds will be Rb 155.9bn (as stipulated in the terms of placement).

Sberbank's representatives have already stated that it currently does not need to increase its capital, and so the placement of shares has taken the form of sale of part of the already existing shares, and not an additional issue of securities. Consequently, the proceeds from the transaction will not supplement the bank's capital; instead, its principal shareholder - the Bank of Russia - will receive the money as its income.

 

Under existing legislation, the Bank of Russia transfers 75% of its profit to the state budget. So, the supplementary revenue of the federal budget generated by the sale of its stake in Sberbank will amount to approximately Rb 120bn, depending on the actual final placement price.

As the bulk of the shares is placed among non-residents, the additional macroeconomic effect of the transaction will be an increased capital inflow into Russia in the amount of approximately $ 5bn. With the RF Ministry of Finance's loans in April 2012 on the Eurobond market in the amount of $ 7bn, this SPO will in part compensate for capital outflow from Russia's private sector, which has already exceeded the sum of $ 40bn since the year's beginning.

 

M. Yu. Khromov - Researcher, Financial Studies Department

Tuesday, 18.09.2012