Russian Sberbank buys DenizBank for $3.5 Billion

09-Jun-2012

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Sberbank, the Russian state retail bank, bought the eighth-largest bank in Turkey on Friday in the latest in a series of acquisitions in countries near Russia’s borders.

Sberbank is backed by the oil-wealthy Russian government and well capitalized, belying the image of Russian banks as wobbly enterprises at best. It entered the global economic recession rich in cash. It has been scooping up discounted assets in the former Soviet Union and Eastern Europe ever since, taking market share from troubled American and European banks.

The dynamic was seen in the purchase on Friday. Sberbank bought the Turkish retail bank DenizBank from the struggling European lender Dexia, which last year was partly nationalized by the governments of France, Belgium and Luxembourg.

Sberbank will pay the equivalent of about $3.5 billion for 99.85 percent of DenizBank, though the price could be adjusted before the sale closes.

The purchase, Sberbank said in a statement, was the latest step in a “transformation from a domestic champion into a leading international financial institution.”

The purchase was the largest for Sberbank, a traditionally conservative institution that traces its history to Czarist Russia. It is ubiquitous in its home market, but until recently it was nearly unknown outside the country.

The bank noted Turkey’s recent, rapid economic growth and the relatively low but rising indebtedness among a young population, all positive signs for expansion of banking companies. German Gref, a former minister of economy who is Sberbank’s chief executive, also said DenizBank possessed computer technology that would help Sberbank in Central and Eastern Europe.

Just this year, Sberbank bought the Eastern European operations of Volksbank of Vienna.

In the former Soviet Union, Sberbank bought branches and increased lending in Kazakhstan and in Ukraine after the 2008 financial crisis to fill a void left by Wall Street banks that had stopped rolling over loans.

At home, Sberbank bought Troika, an investment bank and brokerage firm.

Mr. Gref has said the bank needs to diversify outside of Russia to support Russian companies, travelers and trade abroad. Russian business with Turkey is picking up; the country was Russia’s sixth-largest export market in 2011.

Critics of Sberbank’s strategy, including minority shareholders, say growth at home, where interest rates are higher, would be more profitable. The Russian Central Bank owns 57 percent of Sberbank.

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