Sberbank intends to acquire 100% of the Eastern European division of Oesterreichische Volksbanken AG (OEVAG) – Volksbank International (VBI). The head of the Russian bank, German Gref, announced this at a press conference on Friday.

“All 100%,” he said, answering the question of how many VBI shares Sberbank will buy (quotes from Interfax ). Volksbank International will be integrated into the structure of Sberbank within two to three years. This process will be coordinated by the deputy chairman of the board of the Russian bank, Sergei Gorkov.

Gref also said that the Russian side plans to sign a legally binding agreement on the transaction by the end of July, after which the purchase amount will be announced.

According to the head of the credit institution, in the future Sberbank plans to use VBI as a platform for acquiring other banks in this region. “The size and technology of this platform is suitable to create an international group and use it for further acquisitions in Central and Eastern Europe,” he explained.

Gref clarified that Sberbank intends to attract borrowings on the foreign market in euros in connection with the purchase of VBI. Until now, the Russian bank has borrowed funds on foreign markets only in US dollars and Swiss francs. There are 6 issues of the bank's dollar Eurobonds in circulation with a total volume of $5.5 billion, as well as a bond issue for 400 million Swiss francs.

Let us remind you that on the evening of Thursday, July 14, it became known that Sberbank, after more than six months of negotiations, agreed on the parameters of its first major transaction outside the CIS. The VBI purchase is expected to be fully completed by the end of 2011.

As expected, the largest of the ten VBI divisions, the Romanian one, is being removed from the perimeter of the transaction. VBI is also present in the Czech Republic, Slovakia, Hungary, Croatia, Serbia, Bosnia and Herzegovina, Slovenia and Ukraine. The total assets of these divisions at the end of March amounted to €13.9 billion, with the Romanian bank having the largest share (€4.7 billion). VBI's loan portfolio is €9.9 billion, the volume of deposits is €5.2 billion, profit for the first quarter of 2011 is €102.5 million.

Over the past six months, VBI has reduced the number of offices from 556 to 485, and the number of employees from 5,400 to 5,300.

The transaction amount for the purchase of VBI by Sberbank may exceed €700 million ($1 billion).

Oesterreichische Volksbanken is selling assets to return to the state funding received during the crisis and to increase capital. The group owns 51% of VBI, the German DZ Bank and WGZBank - 24.5%, and the French Banque Populaire Caisse d'Epargne has the same share. In the Oesterreichische Volksbanken itself, 58% is owned by local “people's banks” (Volksbanke), 25% by DZ Bank.

Gref: Sberbank will acquire 100% of VBI