Merger Creates Russian 'Superbank'
Wednesday, January 25, 2012

Sberbank of Russia and Troika Dialog have announced the closure of a deal to merge the two companies, in the process creating the largest banking institution in Russia.

The merger will allow the bank to increase its range of services, from traditional banking services to wealth management and more sophisticated investment banking and global markets products.

Herman Gref, CEO and Chairman of the Management Board of Sberbank, Russia's largest bank, says the merged institution has ambitious targets, and plans to become a major global player in the area of investment banking.

“We are taking the scope of our business to the next level," Gref commented. "The merger will enable us to modernize the Russian financial industry and increase the quality of services we offer to our corporate and private clients. We plan to consolidate and expand our leading positions in investment banking in both Russia and the CIS in the next two to three years and intend to become one of the top 15 global players in terms of debt securities, currency, and commodities operations in the next five years. We have ambitious goals: in 2014 we expect to double income from investment banking activity. At the moment we are already working on over 70 investment banking deals.”

Sberbank accounts for about 27% of the aggregate Russian banking assets and employs about 240,000 people. The bank has the largest countrywide branch network with 17 regional head offices and more than 19,000 outlets as well as subsidiary banks in Kazakhstan, Ukraine and Belarus, a branch in India, and representative offices in Germany and China. Sberbank’s founder and major shareholder is the Bank of Russia, which holds over 60% of voting shares.

Founded in 1991, Troika Dialog is one of the leading investment companies in the CIS. The company’s business consists of securities sales and trading, investment banking, private wealth and asset management, direct and venture investments, retail distribution and alternative investment. Troika Dialog’s operations are located in 21 cities across Russia plus offices in London, New York, Kiev, Almaty and Nicosia.

Preliminary data for 2011 shows that Sberbank and Troika Dialog together generated RUB22bn (USD712m) of income from financial market operations, out of which RUB8bn came from securities sales and trading operations, and RUB6bn from conversion operations and precious metal operations. Investment banking services generated preliminary income of RUB3.4bn.

As part of the restructuring of the two banks' divisions, a new Corporate Investment Bank will be created, which will provide services to the largest Russian and foreign corporations and financial institutions.

Another new division will focus on wealth management services, including asset management and private banking. The unit’s development plans include the creation of the largest private bank in Russia, "leveraging western experience of developing product lines and client service technology".

“We have been granted all the necessary regulatory approvals," announced Ruben Vardanian, Chairman of the Board of Directors and CEO of Troika Dialog. "Our company is now becoming a part of Sberbank and it is a pleasure for me to open this new chapter in the history of Troika Dialog. We are turning into a unique partner for investors from Russia and the CIS who require access to the global financial markets, and also for international clients who can take advantage of the opportunities that are opening up for them in the region. In the immediate future we will continue to strengthen our team and have made plans to develop existing products and launch new ones. At the moment we view global market operations, structured products and investment banking services as promising areas of business.”