Via Financial Times

Russia’s central bank is selling its controlling stake in Sberbank to the finance ministry in a move aimed at streamlining state control of the country’s largest lender and funding Vladimir Putin’s promises to raise living standards.

The central bank said it would sell 50 per cent plus one share of Sberbank to the ministry at a “market price” near the stake’s current value of Rbs2.8tn on the Moscow exchange.

As much as 75 per cent of the sale proceeds will be paid straight back into state coffers, helping pay for Rbs4tn in spending that Mr Putin pledged last month while announcing constitutional changes that could result in him ruling indefinitely.

The finance ministry will tap Russia’s $125bn national wealth fund of surplus oil and gas revenue to purchase Sberbank. The sale will go through in instalments and be completed before 2022.

“Revenue from the deal could . . . be brought back to the budget eventually [and add up to] Rbs2.8 n into budget revenues — more than enough to finance additional social stimulus for 4-5 years,” said Sofya Donets, chief economist at Renaissance Capital.

The Kremlin wants to use as much as Rbs300bn a year from the national wealth fund for infrastructure spending to boost moribund economic growth and stagnating living standards — on orders from Mr Putin, whose approval ratings hit record lows last year.

The move is ostensibly aimed at righting a historical anomaly dating back to Sberbank’s role as the monopoly Soviet savings bank. The central bank retained its controlling stake in Sberbank after the USSR collapsed, despite regulating it.

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“The decision to sell the stake will remove an issue of potential conflicts of interest,” finance minister Anton Siluanov said.

Transferring control will help the central bank and finance ministry strengthen oversight of Sberbank and its powerful chief executive Herman Gref, a confidant of Mr Putin since the 1990s, according to people familiar with the plans.

Mr Gref has been widely praised for adopting western-style governance and technological change at Sberbank, which was seen as a corrupt, decrepit dinosaur when he left the cabinet to take it over in 2007. The bank’s enormous funding base — it holds nearly half of all Russian retail deposits — has boosted Mr Gref’s efforts to build a successful tech-focused company — while consistently delivering enormous profits, which hit a record Rbs831.7bn in 2018.

Last month, Mr Gref said he was “more positive than negative” about the planned change in ownership, but threatened to quit if the government pushed him to change Sberbank’s strategy.

Mr Siluanov said the finance ministry and central bank both wanted to “support Sberbank’s priority and strategy” and “maintain its growth policy”.