Page 77 - RUSRptApr17

on them mounts. Sberbank is selling its Ukrainian business at the price below capital, the CEO of the bank German Gref said on April 5, without disclosing the amount. According to previous reports , the price paid by Latvian Norvik Bank and an unnamed Belarusian private company is $130mn.
Sberbank will gain in profitability in the coming 12 to 18 months due to its recovering operating environment and expected pick up in new lending, Moody’s Investors Service argued in a report published on April 6. Analysts expect Sberbank's net interest margin to remain more than 100 basis points higher than the sector average in 2017 and 2018. In 2016 Sberbank posted a return on average assets (ROAA) of 2.1%, up from 0.9% in 2015, and Moody’s anticipates an even higher return this year. The bank’s revenue generation is also seen as benefiting from the recently restored net interest margin of 5.3% versus 4% sector average. O n the cost side, the bank's cost-to-income ratio improved to 41% in 2016 from 49% in 2012, and it expects further savings gains could be achieved due to branch closures, staff reductions, and a transition to digital solutions.
Russian development bank VEB will be made over to become a Project Finance bank , says Prime Minister Dmitry Medvedev. Funding should be provided for a long time (15 years) and at a fixed rate. It should not exceed the sum of three elements: the target inflation rate of 4%, the market valuation of the yield (based on inflation bonds) and the premium for credit risk (not higher than 350 basis points). Currently that sets a ceiling of 10.75%. To make project financing more attractive, VEB will have to compete against a syndicate of investors: to compensate for the difference between the target indicator, and short-term floating rates, for example, money market can be used as an option, through an interest rate swap. If inflation and rates will go up, VEB will take on the losses of investors, and then will receive compensation from the budget.
Russia’s Tatfondbank has been ruled bankrupt by the Arbitration Court of the Republic of Tatarstan , while central bank officials said there was a RUB118bn (€1.94bn) capital hole between the lender’s assets and liabilities accounts, Vedomosti daily reported on April 11. As a part of its ongoing banking sector “clean-up” the Central Bank of Russia (CBR) rocked the banking system of the Russian federal republic by withdrawing licences from three regional banks, including Tatfondbank, which ranked among Russia’s top-50 in terms of assets.
Commissions earned by Russian investment banks in the first quarter of 2017 soared by 79% year-on-year to $63.7mn according to a report by Thomson Reuters. Riding the wave of equity deals that rose in the beginning of 2017, the banks earned $21.4bn on equity and $21.4bn on security placements. Notably, the placements of equities and securities in the first quarter set the record since 2013 amounting to $7.3bn and $1.2bn, respectively. The leading bank in terms of commissions earned was VTB Bank with $23.4mn or 37% market share for that quarter, accounting for 22% of equity and 18% of debt deals. VTB was followed by JP Morgan, Gazprombank, Sberbank CIB, and Citi. The banks also made $17.1bn in M&A deals in the first quarter, up by 13% y/y, with Deutsche Bank announcing deals worth $1.9bn. At the same time commissions on syndicated loan deals dropped 68% to $3.4mn.
The board of Russian energy utilities major InterRAO approved buying RUB125bn (€2.1bn) worth of convertible bonds of failed bank Peresvet
77 RUSSIA Country Report April 2017 www.intellinews.com