Gref Says Sberbank May Reach Top 10

Global financial turmoil will help Sberbank join the ranks of the world's top 10 banks by market capitalization in the next five years, CEO German Gref said in an interview.

Gref, a former economic development and trade minister, has brought in international consultants to turn around the former monopoly savings bank and make it a global player.

"The task that we have set for ourselves and that our consultants confirmed to us as realistic is to enter the world's top 10 banks by market capitalization," Gref said in an interview last week at Sberbank's head office.

Sberbank, with a market capitalization of $71 billion, is ranked in the top 20 global banks now.

Gref said Sberbank, which employs a quarter of a million people and runs 22,000 offices in 10 time zones, was a unique institution that could use global market turbulence to its advantage.

"During the crisis, we feel much better, people place their savings with us because our bank enjoys the highest credibility, while firms entrust us their money to hedge against their liquidity risks," Gref said.

Underlining the differences between Sberbank and its West European competitors, Gref said the bank held no risky mortgage-backed securities, only 3 percent of its liabilities were foreign loans and retail deposits were its main funding base.

"The bad economic situation in the world helps us because it becomes impossible for Russian firms to borrow in dollars or in euros," he said.

"For us it is a plus because clients come to us."

Consulting firms McKinsey and Bain plan to unveil the new strategy for a reinvigorated Sberbank in midfall. After that, Sberbank will hold a strategy roadshow for international investors with its updated operational performance targets.

Gref said the state no longer exerted pressure on Sberbank.

"We have 52 percent of all deposits in the country. No one wants to play politics with us," Gref said.

He said Sberbank was looking at both acquisitions and organic growth to achieve its goals and was considering acquisitions in Eastern Europe and former Soviet countries as well as in Asia in the longer term.

Gref said the bank had no plans to acquire an investment banking business and would instead grow it organically. The bank will also introduce a stock option program for managers to attract and keep top talent in the country's hot job market.

Gref, who publicly criticized the former management for issuing loans to large Sberbank shareholders who used shares in the bank as collateral for new loans, said the shareholding structure became "healthier" after some minorities sold out.

He said billionaire Suleiman Kerimov still owned 1.5 percent to 2 percent of Sberbank after selling a stake of about 4 percent in the last six months. He remained the largest single holder after the Central Bank, which has more than 60 percent.

Sberbank shares are down 26 percent since the start of the year compared with 48 percent for its main rival, VTB.