Top > Business > 2006 > December > 2006-12-27

Russia Is Opening the Banking Sector to Foreign Investment

The Russian government authorized the sale of a portion of two of the country`s largest banks, Sberbank and VTB. The volume of the same is expected to be approximately $12 billion, and is to be conducted through public offerings during 2007. Russian and foreign investors have shown much interest in the sale of Russia`s banking system.

Alexei Kudrin, Russia`s Finance Minister said that the Sberbank regulating council, Russia`s largest bank, has approved a public offering of shares of up to $7.61 billion. Kudrin, which is a member of the council, said that the public offering will be the biggest in Russia ever. Kudrin added that it should take place in the end of February 2007. In addition the Russian government approved the sale of the second largest government owned bank in Russia, VTB, which is expected to take place in May, in stock exchanges in Russia and elsewhere. Russian Economic Minister German Gref plans to raise $4.57 billion from the sale, half of it in Russia and the rest abroad.

Both announcements were given several days after the Russian Parliament passed a bill canceling the limitation on the sale of Russian banks to foreign investors. Russia`s central bank currently owns 60% of Sberbank, the former Soviet Savings Bank, which holds an extensive array of braches across Russia and holds a large portion of the Russian retail banking sector. VTB was founded in 1990, a short while after the collapse of the Soviet Union, in order to finance foreign trade.