OREANDA-NEWS. March 11, 2011. Sberbank of Russia and Troika Dialog have announced the signing of a memorandum of understanding to combine Russia’s largest bank and the country’s leading investment bank. This landmark event creates numerous benefits for international financial markets by bringing together the knowledge, expertise and resources of two leading Russian financial institutions.

Sberbank’s position as the leading provider of banking services for corporate clients will be strongly complemented by Troika Dialog’s plentiful resources and talents in corporate finance and financial markets operations. As a result, thanks to the Troika Dialog platform, Sberbank’s clients will benefit from, among other things, direct access to investment banking services on markets in Russia, Ukraine and Kazakhstan, as well as to trading platforms in London and New York. In addition, the planned merger provides Sberbank’s clients with opportunities for effective collaboration across the Russian and international investment communities. Thus the Sberbank group of companies will provide all clients with the full range of market-leading products and services, including investment banking services.

The merger of product and service offerings in both the commercial banking and investment banking businesses will bring increased revenues to the combined business and produce a significant synergistic effect. All of Troika Dialog’s current businesses will benefit from numerous, additional sources of growth through Sberbank’s client base and balance sheet. The employees of both companies gain new prospects for career growth and development.

Standard Bank remains as one of Troika Dialog’s most-favoured international partners, presenting new opportunities for growth of the company’s product line and geographic footprint.

The Sberbank and Troika merger provides a strong impetus for developing, broadening and enhancing the Russian financial market, and represents a major step in setting up an international financial center in Russia. In particular, the merger significantly enhances the caliber of services received by major corporate clients by providing access to the full range of financial and banking products as well as international capital markets. These modern financial services will be delivered to new segments of the corporate market as well as to retail clients, whom until now not one investment bank on the Russian market was capable of “reaching.” This includes more than 50 thousand of Sberbank’s corporate clients from the mid-sized company segment and the company’s tens of millions of retail clients.

According to Herman Gref, CEO and Chairman of the Board, Sberbank of Russia, “Sberbank is acquiring the leading investment banking platform specializing in securities trading, brokerage, mergers and acquisitions, corporate finance, asset management and private banking, all of which will be offered to our clients in Russia, the CIS and beyond. We are gaining the unique opportunity to offer modern financial services to tens of thousands of Russian companies that up until now lacked such possibilities. Sberbank and Troika Dialog have cooperated for many years, and we plan to invest in our combined team to fully develop its potential and maximise the synergetic impact. In the next 3-5 years we will establish a strong, leading presence on the corporate and investment banking services market overall and for each separate product line in particular.”
The deal is contemplated in two stages over the course of three years. Initially, Sberbank will pay USD 1 billion for a 100% stake in Troika Dialog from the shareholding of Standard Bank Group (36.427%) and the Troika Dialog Partnership (63.573%). Troika Dialog’s Partners, Standard Bank will be entitled to additional remuneration in three years. The amount of the remuneration is based on 50% of the difference between Troika Dialog’s average yearly net profit from 2011-2013 multiplied by a coefficient of 13.5 and the sum of USD 1 billion already paid by Sberbank of Russia. To ensure expedited integration of the two companies, the structure of the deal stipulates an integrated bonus pool for participants of the merger process to be paid from the sum of additional remuneration.
Under the terms of the agreement, for the next three years Troika Dialog will operate as a stand-alone entity with a high degree of independence within the Sberbank group of companies. Sberbank is confident in Troika Dialog’s management team, highly values its international reputation and Troika’s strong brand appeal. Ruben Vardanian will remain as CEO (President). Sberbank representatives will join the Troika Dialog Board of Directors.

According to Troika Dialog CEO and Chairman of the Board of Directors Ruben Vardanian, “This deal creates far-reaching opportunities to take our investment banking business to a new, global level by taking advantage of the unparalleled access to a wide network of large Russian and foreign corporations and government institutions, the largest branch network in Russia and significant financing opportunities through leveraging Sberbank’s balance sheet. The combination of platforms shall allow us to offer our clients universal financial solutions using a broadly diversified product and services offering.”