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Eastern Europe
October 5, 2018 www.intellinews.com I Page 17
Sberbank shrugs off Brexit and sanctions by investing £80mn in London unit
Jason Corcoran in London
Russia’s biggest lender Sberbank has shrugged off concerns about both Brexit and sanctions by committing £80mn ($104mn) in the second half of this year to its loss-making London investment bank, bne IntelliNews can reveal.
Annual filings made by the bank on September 28 with UK Companies House shows that £80mn was injected by the parent in a move, which doubles the capital of the London unit of Sberbank CIB.
The investment is easily the largest by Sberbank into its UK business and follows an injection of £40mn made in February this year and smaller amounts worth £5.5mn and £3mn made by the parent last year.
"Unlike some other Russian corporates exiting Londongrad, Sberbank has not been freaked out by Brexit or sanctions and is seemingly staying put come what may," a Russia-focussed fund manger, who invests in the lender, told bne IntelliNews.
Sberbank, which is led by President Vladimir Pu- tin’s former economy minister German Gref, said “the additional capital will support an expansion of the equities and fixed income businesses as well as the introduction of derivatives and additional capital markets products.”
The lender also said the funds were made to sup- port the UK unit’s capital base and to ensure that sufficient capital buffers were maintained, sug-
Russia’s biggest lender Sberbank invests £80mn in its loss making London branch
gesting the Russian banking behemoth is commit- ted to remaining in the UK beyond the country’s departure from the EU.
The additional capital hasn’t yet helped to trans- form the fortunes of the embattled business, which is based on Fleet Street in London near the Old Bailey.
The latest filings show losses for the UK subsidiary expanded to $8.2mn last year from $6.8mn in 2016.
“Although the impact of existing sanctions and the ever-present potential for additional sanctions continues to influence clients’ decision-making, 2017 was an encouraging year, particularly for fixed income performance,” Sberbank CIB said
in the September 28 filing.
Revenue from fixed income rose by 16% last year to £6.1bn but was partly offset by a 23% slide in revenue from trading in equities, which declined to £2.2bn.
That revenue from trading in fixed income instru- ments could be completely obliterated if the US Congress passes is so-called “sanctions bill from hell” after the US mid-term elections. The legis- lation, which is aimed at punishing the Kremlin for interfering in the US Presidential elections, would restrict investment in new Russian sov- ereign debt and the country’s vitally important energy sector.