Putin Wants Sberbank to Become People’s Bank
// The president’s request puts off the bank’s IPO till the second half of 2007
Russian President Vladimir Putin asked the government on Monday to hold “people’s IPO” of Sberbank’s stocks. The president asked to “make sure that people will buy these stocks.” This means that Russia’s major bank will have to split ask price for a stock. The bank’s share currently costs $3,080. Experts say that this procedure will put off Sberbank’s public offering till the second half of 2007.
“The offering of Rosneft’s stocks has shown that people are happy to buy liquid securities of Russian companies. Vneshtorgbank and Sberbank are, of course, among such companies,” Vladimir Putin said at the government’s session yesterday, highlighting a need to “make sure that people will buy these stocks.” Economic Development and Trade Minister German Gref confirmed that the planned additional share issuing of Russia’s largest bank would make the stock’s price so low that “Russian citizens will be able to buy them”. A Kommersant source in the Russian Finance and Economic Development Ministries report that an idea of holding the so-called people’s IPO for Sberbank is a brainchild of the president’s administration.
As of October 1, Sberbank is Russia’s largest bank in terms of capital (326.4 billion rubles) and assets (3.155 trillion rubles), according to the Kommersant Dengi financial weekly. The Bank of Russia owns 63.76 percent of Sberbank’s voting stocks, or 60.57 percent of the authorized capital. Other stocks are in the hands of one thousand shareholders.
Alla Aleshkina, Sberbank’s BOD first deputy chairperson, told analysts early October that the bank was going to offer up to 4.7 million stocks worth some $10 billion in the first quarter of 2007. The president’s request means that the government, the Central Bank and Sberbank itself will no have to amend their plans for the IPO. Rosneft’s stocks, each worth $7.5, were available to most Russians, whereas the price of Sberbank’s one stock was $3,080 on Monday. “Sberbank shares have to cost no more than $100 to attract people’s interest,” Kirill Petrov, director of Binbank’s financial and stock market operations department, says. Private investors bought as much as 1 percent of the offered shares in Rosneft’s IPO, which is 100 million shares worth 755 million rubles.
The Bank of Russia has seen no point in splitting Sberbank’s stocks until recently, a high-placed source of Kommersant in the banking authority said. “Market rules work here – if you have no money, you’ll get no stocks,” the official at the Bank of Russia told Kommersant. “This is not a social welfare program. Also, the split will make the process more difficult.” Still, the split of Sberbank’s stock looks inevitable after the president’s request. With the current number of shareholders of Sberbank – which has 40 percent of its stock traded on open markets – the run-up for the public offering will be tough. Natalya Orlova, senior economist at Alfa Bank, says that decisions like this are supposed to be taken by a shareholders’ meeting. “Gathering shareholders – some 1,000 people – in two months is hardly possible,” Ms. Orlova says. “It means that the bank will go public no earlier than in the second half. On the other hand, offering stocks in the second half is a matter of the principle for Sberbank which needs capital to secure its foothold on the market.”
Sberbank’s preparation for the IPO is already jeopardized, though, because of disagreements in the government over details of the offering, chiefly, its size and dates. A session of Sberbank’s supervisory board, which takes this kind of decisions, has been put off for a few times already. Another session is slated for this Tuesday. However, “the session is most likely to be held only at the end of the week because lots of issues are still in dispute”, a member of Sberbank’s supervisory board said in an interview with Kommersant.
Nevertheless, analysts believe that not only ordinary people but also investors will appreciate the split of ask price. “This will be more convenient both technically and psychologically,” Alex Kantarovich believes. Market participants shared this opinion yesteday, buying up Sberbank’s securities after the news appeared. On Monday, Sberbank’s stocks closed 3.77 percent up at the MICEX and 4.05 percent up at the RTS exchange.
Apart from Sberbank, the Russian president also suggested that Russians buy shares of Vneshtorgbank, the country’s second largest bank. This will be not so difficult, though, as the government owns 99.9 percent in the company. The IPO, which is scheduled for next May, may sell up to 22 percent of Vneshtorgbank’s shares worth 120 billion rubles. Vneshtorgbank’s President Andrey Kostin says people may be offered up to 5 percent of the bank’s stocks. One share may cost 0.071-0.085 ruble.
Elena Kiseleva, Inna Inozemtseva and Igor Moiseev
All the Article in Russian as of Dec. 19, 2006
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