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April 13, 2017 www.intellinews.com I Page 3
Sberbank shrugs off Brexit fears with £4.5mn injection into London unit
investment banking unit, confirmed that the £4.5mn capital injection had been made in March.
Sberbank regulatory filings last year show that the funds were made to support the UK unit’s capital base and to ensure that sufficient capital buffers were maintained, suggesting the Russian bank- ing behemoth is committed to remaining in the UK beyond the country’s departure from the EU.
Sberbank CIB declined to immediately outline any plans it may have for setting up a headquarters for its investment bank within the EU.
Sberbank, which controls about 46% of Russia’s deposits and a third of the nation’s loans, has had a torrid time in the UK over the few years. The business was cut to the bone following a quadru- pling of losses in 2014 and a record $5mn sexual discrimination award to Svetlana Lokhova, a for- mer equity saleswoman.
Lokhova was thrust back into the spotlight this month after it emerged she had struck up a friend- ship with Michael Flynn, US President Donald Trump’s disgraced former national security adviser, in her new role as a Soviet intelligence historian.
Lokhova was taunted by her London colleagues with unfounded allegations of drug use and driven to a mental breakdown, an employment tribunal ruled. She later passed a drug test taken at her insistence, while the tribunal ruled that then UK boss Paolo Za- niboni had victimised her by failing to discipline the London-based bankers who bullied her.
The former saleswoman was eventually awarded £3.2mn after finding she had been a victim of har- assment, victimisation and discrimination amount- ing to constructive dismissal. Zaniboni and David
Longmuir, a banker who was also implicated in the case, have both since left the London business.
Snarled by sanctions
Sberbank, like most Kremlin-controlled lenders, was sanctioned by both the US and the EU over Russia’s involvement in the Ukrainian conflict, and recently an- nounced the sale of its Ukrainian business at a loss.
Sanctions do not prohibit clients from trading with Sberbank, but they do restrict investors from accessing debt and equity financing from these lenders with a maturity of longer than 30 days. To compound matters, many leading UK, European and US fund managers opted to sever trading lines entirely with Sberbank for fear of incurring the wrath of Wall Street regulators.
Hopes that the elevation of Trump to the US White House might lead to a relaxation of sanctions have since evaporated. On the contrary, Washington and London have been trying to gather support for impos- ing new prohibitions on Russia for its aiding of the Syrian regime of Bashar al-Assad. However, the UK and US on April 11 failed to persuade the G7 foreign ministers to apply new sanctions at the current time.
The number of employees at Sberbank’s London office shrank last year to 30 from 37 for the prior year. Chief operating officer Adam Jesney was ap- pointed as acting chief executive last year follow- ing Zaniboni’s departure.
Sources close to the bank had told bne Intel- liNews last year that Sberbank boss German Gref was considering pulling the plug on its costly London and Wall Street operations.
Gref, a former economy minister under President Vladimir Putin, told Bloomberg News last year that investment banking is “not our strategy in the long term”, because it’s not growing as fast as the bank’s retail or corporate units. Gref has soured on investment banking since paying Armenian banker Ruben Vardanian and his colleagues more than $1bn in 2011 for Troika Dialog. The business was later rebranded Sberbank CIB.