February 13, 2020 / 3:18 PM / 2 months ago

UPDATE 1-Russia's c.bank to sell Otkritie and Sberbank within a year

(Adds details, quotes, background)

By Elena Fabrichnaya, Darya Korsunskaya and Olga Popova

MOSCOW, Feb 13 (Reuters) - The Russian central bank plans to start selling Otkritie bank, which it bailed out three years ago, in 2021, governor Elvira Nabiullina said on Thursday, in a move which heralds major changes ahead for the domestic banking sector.

Russia’s banks, once a favoured investment target for foreign lenders thanks to their high margins, were hard hit by western sanctions imposed on Moscow over its role in the Ukraine crisis in 2014.

The Sanctions provided Nabiullina, appointed by President Vladimir Putin in 2013, with a chance and a challenge: the fractured banking sector halved to nearly 400 players amid her clean-up but she had to bailout some lenders too.

Following a 2-trillion-rouble ($31.5 billion) bailout of three private banking groups in 2017 and some restructuring, the central bank owns Otkritie and Trust banks. It has also owned a 50%-plus-one-share in Sberbank, the country’s largest bank, for nearly three decades.

Sanctions, bailouts and the retreat of foreign investors have increased the state’s influence over the banking sector. The central bank, criticized for both owning the banks and regulating the sector, will now have likely fully sold Sberbank by mid-2021 and start selling Otkritie the same year.

“A very important thing for us is to sell Otkritie on the market,” Nabiullina told reporters on Thursday. “(But) this is just a coincidence that we are selling Sberbank and Otkritie at the same time.”

Last month, the central bank sent requests for proposals (RFP) to 12 banks, including foreign ones, seeking their views on how to sell Otkritie. It is yet to choose the most suitable option and to shortlist banks for the deal.

A Russian banker who received the RFP told Reuters that while no final decision had been taken, the central bank is leaning towards an initial public offering of Otkritie possibly in May next year. The bank has indicated it does not want other state lenders to buy Otkritie.

Nabiullina did not provide more details on Thursday or say how big a stake in Otkritie the central bank plans to offer.

The finance ministry plans to start buying Sberbank from the central bank this spring, spending a total of 2.4 trillion roubles on the deal which, depending on oil prices, will end this or next year, the minister Anton Siluanov said on Thursday.

Siluanov indicated that chief executive German Gref, who has turned the bank into a digital financial services pioneer thanks to its healthy margins, will keep his post and enjoy continued support for his strategy.

Gref has run Sberbank from 2007, following seven years as economy minister. Nabiullina was Gref’s first deputy at the ministry for a couple of years. ($1 = 63.5555 roubles) (Reporting by Elena Fabrichnaya, Tatiana Voronova, Gabrielle Tétrault-Farber, Darya Korsunskaya and Olga Popova Additional reporting by Alexander Marrow Writing by Katya Golubkova; editing by John Stonestreet and Alexandra Hudson)

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