Earlier this week, Russia’s central bank sold a 7.6% stake in the country’s largest lender, Sberbank. The offer—twice oversubscribed—priced at Rb93 per share (US$3.04), raising around US$5.2bn for the state. This represents a significant chunk of the US$50bn in proceeds that Russia expects to raise through an oft-revised, long-delayed privatisation programme.
The Sberbank sale is also an invitation to revisit bank valuations. The Russian banking giant, with around US$380bn in assets, trades at around 1.5 times book value. It controls nearly half of Russia’s retail deposits and benefits from the backing of the oil-rich state, which retains a controlling stake (50% plus one share) in the lender. Sberbank set its sights abroad earlier this year, with the purchase of assets in Eastern Europe and Turkey from their struggling West European parents. Speaking of which, the US$5.2bn that it cost investors for around 8% of Sberbank would fetch a significantly larger stake in many Western banks.
The interactive chart below plots US$5.2bn as a percentage of large banks’ listed shares on the vertical axis, and for context includes lenders’ total assets along the horizontal axis. Belgium’s KBC is similar in size to Sberbank in terms of assets, but a US$5.2bn investment would buy majority control of the Brussels-based bank. The lowly valuations of French banks are also noteworthy when viewed this way; Credit Agricole is six times larger than Sberbank in terms of assets, but for every 1% of the Russian bank’s shares an investor could pick up nearly 4% of the French bank’s equity.
Chart data sourced from Bloomberg
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