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. Last Updated: 07/27/2016

Putin Tells Sberbank Retail Is A Priority

While visiting a Moscow branch of Sberbank on the retail monopoly's 160th birthday on Monday, President Vladimir Putin urged the banking giant to focus on working with small businesses.

The bank should not only "collect money from the population ... but, using your monopoly position on the market, work with industry, in particular, small and medium businesses," Interfax reported Putin as saying.

Sberbank holds about 75 percent of retail accounts, 40 percent of loans to the population and 40 percent of loans to the real sector.

"I understand you need to be sure that loans will be repaid. Of course, working with organizations like [metals giant] Russian Aluminum, for example, is nicer and more reliable," Putin said.

"But you must also work in the risk zone," Putin said. "The more professional you are, the less risk there is of losses."

Putin said the bank should retain its branches in outlying and scarcely populated regions where few or no other banks exist.

Sberbank has cut back its regional network from 36,000 branches in 1996 to 19,900 branches in 2001, Sberbank president Andrei Kazmin said in the Kommersant newspaper Monday.

"We are interested in having competitors in outlying regions where none exist today ... or we will have to continue to hear eternal reproaches of monopolism," Kazmin said. The only way to lure banks into such areas is to introduce appropriate tax breaks for banks in such regions, he said.

Putin's remarks came days after the Anti-Monopoly Ministry proposed a program to reform Sberbank by clearly defining its role in the economy, including a tariff policy to prevent Sberbank from underpricing competitors' interest rates and replacing Central Bank representatives on Sberbank's supervisory board. The Finance Ministry and Central Bank hold 11 of 17 of the seats on the bank's supervisory board.

Kazmin addressed some of the criticisms often leveled at the retail monopoly, such as having unfair advantages due to its close relationship to the Central Bank and a government guarantee not available to other commercial banks. "I fundamentally disagree that people bring their savings to Sberbank only because they are guaranteed," he said.

Kazmin said Sberbank would support a move to cancel guarantees or vote to create a deposit guarantee for all private banks as long as Sberbank's contributions to a system-wide deposit guarantee scheme were kept in a separate account at the Central Bank in order "to refute the incorrect hypothesis ... that we have a noncompetitive advantage because we have such a guarantee."

Kazmin also denied Sberbank uses its monopoly position in the retail market to underprice other commercial banks on deposit and commercial loan rates and has mistreated minority shareholders.