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. Last Updated: 07/27/2016

CB to Up Stake in Sberbank to 63%

The Central Bank will buy part of a new share issue to increase its stake in the country's biggest bank, Sberbank, to 63 percent from 57.66 percent, Central Bank Chairman Viktor Gerashchenko said Monday.

"We are not going to lose control of Sberbank," Gerashchenko told Vremya Novostei daily in an interview published Monday. "We have even decided to slightly increase our holding to 63 percent," he said. "We are going to do this in part because it will be possible to buy the shares for a good price now. Then when it comes time to give up our stake in Sberbank, in theory, we'll get a profit that will go to the budget," he added.

According to Russian legislation, the Central Bank must have at least 50 percent plus one share in Sberbank, which holds the bulk of Russian household savings.

But the International Monetary Fund and the World Bank insist that the role of state-owned banks in the economy should be reduced to increase competition in the banking sector.

Under law, the Central Bank is to get rid of its stakes in banks by 2005.

Sberbank is preparing a public offering of new shares, amounting to about 26.3 percent of its ordinary shares, for 5 billion rubles ($173.3 million), or about $35 per share.

A group of minority shareholders, which says it holds about 10 percent of the bank, says the shares will be sold at a fraction of book value.

Some analysts say the issue is a healthy capital-raising exercise, while others say it is unnecessary and one of Russia's powerful financiers could use it to build up a substantial minority stake in the bank.

Gerashchenko said the issue was necessary because Sberbank could not meet all Central Bank requirements due to its low capital.