Racing

Sberbank and VTB intend to collect more than $11 billion from investors

Minister of Economic Development German Gref yesterday told how much money the two largest Russian state banks are going to attract from the market next year. The additional issue of Sberbank will amount to 198 billion rubles, and the initial public offering of VTB shares will be worth about 4 billion dollars. Thus, the volume of additional issues will be slightly less than market participants expected. At the same time, experts note that the minister did not answer the most important question regarding the upcoming placements - which bank will be the first to offer its securities to investors. The success of the placement will directly depend on this.

The parameters of Sberbank's placement announced by Mr. Gref almost coincide with the volume of additional issue of the credit institution, which was presented last night at a meeting of the National Banking Council (NBS). As was known earlier, in the report “On the system of state-owned banks in the Russian Federation”, prepared for the NBS meeting, they spoke about the volume of additional issue in the amount of about 200 billion rubles. Thus, the number of outstanding shares may reach up to 3.05 million, and the Central Bank’s share in Sber’s capital will decrease from 63.75 to 53-55%.

“This size of the additional issue is less than the market expected,” says Alfa Bank analyst Natalya Orlova. “Investors expected that the number of shares offered during the additional issue would be about 3.5 million.” It is quite possible that the state’s decision to place just such a package is due to its reluctance to reduce the Central Bank’s share to 51% in one additional issue. “It is obvious that the controlling stake in the bank would have remained with the state in any case,” says Ms. Orlova. - However, having now left 53-55% of the shares under the control of the Central Bank, in the future the authorities could carry out another additional issue. But if now the Central Bank’s share is 51%, then it would be problematic to carry out further additional issues of Sberbank and at the same time maintain state control over the bank.”

The parameters of VTB's placement turned out to be quite expected. The amount of $4 billion corresponds to the value of 20% of the shares of the credit institution. The bank's managers had previously announced the sale of such a stake.

Observers note that the timing of the placements of the two credit institutions has not yet been officially announced. “It is fundamentally important for VTB to offer its securities to the market ahead of Sberbank,” Ms. Orlova believes. “The price of the shares will directly depend on this.” While VTB does not have a public history, the bank will sell its securities on stock exchanges for the first time. Consequently, VTB does not have a market assessment of its value, unlike Sberbank, whose shares have been traded on the market for a long time. This is one of the most sought-after Russian blue chips, and many investors will gladly buy a security they know. Simply put, Sber already has the trust of market participants, and VTB still has to earn it.

VTB also understands the need to be the first to enter the market. The other day, the head of the bank, Andrei Kostin, said that placements of Sberbank and VTB on stock exchanges affect the same groups of investors, so coordination in this matter is necessary. “We must get a decision to increase the capital base and then sit down at the negotiating table with Sberbank, the Central Bank, the Ministry of Finance,” Mr. Kostin said. The head of the Ministry of Finance, Alexei Kudrin, hastened to reassure the head of VTB: “There is too much concern, we will ensure a time frame that is beneficial to both banks. I think everything will be done within the pre-agreed timeframe.”

As you know, the additional issue of Sber is currently planned for the first quarter of 2007, VTB's IPO for May 2007. However, there are no exact dates for the placement yet, and it is quite possible that both banks will have to use all their administrative resources to be the first in this unofficial race.

Natalia ROMANOVA