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bne February 2022 Companies & Markets I 21
agency Expert has increased them three notches. Otkritie is also rated by Moody’s, which has increased its rating three notches to Ba2, and Fitch has upgraded the bank to BB+.
The CBR’s plan from the start has been to sell all the banks
it took over in 2017 and with the strong profits Otkritie is
now earning that is possible. As bne IntelliNews has reported, Russia has been enjoying an IPO boom in the last 18 months, although after geopolitical tensions reappeared in October the market sold off and the IPO window may be closing now.
“The CBR’s goal has always been to reduce the share of state- owned banks in the system and privatise our bank,” says Levin. “It will be sold either by IPO or to a strategic investor. The CBR has said that both options are acceptable.”
As bne IntelliNews has reported, the pandemic had a very muted effect on the Russian bank sector, which saw profits grow in 2020 and currently are enjoying their most profitable year since Russia’s economy slowed to zero in 2013. The state- owned banking giant Sber (formerly known as Sberbank) earned RUB1.4 trillion in the first nine months of this year
by itself, whereas in 2016 the entire sector earned just under
RUB1 trillion for the full year. This year the sector should earn about double that.
Levin says there are three things driving the current strong bank sector results. The first is new businesses are flourishing, such as lending and factoring that are adding to bottom lines. The second is the cost of risk is falling and is now low. Banks have invested heavily in their models and data management to further improve the quality of their business and that has been paying off.
Finally, banks have been a big winner from the pandemic in the sense that it was a strong catalyst for the technological transformation that was already under way. Otkritie has invested over $1bn into IT in the last three years and now 95% of its interactions with customers are online and its Tochka bank that specialises in the SME business has no branches at all.
Even the number of branches at Otkritie – and it has traditionally been one of Russia’s strongest retail banks – has been falling from 750 branches in 2018 to 480 as of September 2021 and is expected to further decrease to 400 by the end of 2022, says Levin.
Omicron variant ends Romania’s stock market rally
Iulian Ernst in Bucharest
After continuing to soar through Romania’s recent political crisis, the Bucharest Stock Exchange (BVB) was badly hit by the confirmation of the new variant of COVID-19 virus, omicron. The blue chip BET index suffered the steepest daily decline since mid-2020 on the last trading day of the month, and ended the month marginally (1.1%) lower than it started.
On November 26, the day the World Health Organization (WHO) designated omicron a variant of concern, the BET index fell 3.41%, the steepest daily decline since June 2020, while the BE-NG index of energy and utility companies plunged by 4.12%.
The whole last week of November was impacted by the bad news related to the new COVID-19 developments, which prompted caution among investors.
On a weekly basis, Romania’s stock market indices posted the steepest decline since the COVID-19 shock in February-March last year.
In Romania, the period coincided with the stabilisation of the political situation by the formation of a grand coalition
between the National Liberal Party (PNL) and Social Democratic Party (PSD). However, this political arrangement has not generated optimism among investors. Despite pledges made by the Social Democrats, who de facto control the new government formally headed by Liberal Prime
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