OREANDA-NEWS. November 27, 2012. The ex-minister helped the Russian bank benefit from the turnoil, says Charles Clover. Few European bankers can claim to be winners from the eurozone crisis. But one of the biggest success stories to emerge from the turmoil has been Sberbank, reported the press-centre of Sberbank.

Russia's largest bank by assets, which is majority owned by the state, has spent the year completing deals to expand into southern and eastern Europe, many of which would have been impossible in a healthier financial climate.

German Gref , Sberbank's chairman, surveys Moscow's skyline from the windows of his 25th-floor office with satisfaction.

"Of course, the eurozone crisis helped us in our acquisition strategy," he says in a somewhat politically incorrect admission. "But now we have to work in this region where we have invested and so of course we are interested to see this crisis end as quickly as possible".

He is talking about two landmark deals this year. In the first, Sberbank expanded into eastern Europe in February by  buying Volksbanken International , a network of branches in the region belonging to Austrian lender  Wsterreichische Volksbanken .

In the second, Sberbank pulled off the largest deal in its 170-year history, by acquiring  Denizbank , the sixth-largest private sector bank by assets in Turkey, in September.

Sberbank, which has about 70m domestic customers – about half of Russia's banking market – was created out of the old Sberkass system which handled state salaries in Soviet days: it was "the ministry of paying money", says Mr Grеf.

Russia's former minister of economy and a noted proponent of liberal market reforms, Mr Gref is a self-confessed workaholic who has been known to schedule meetings at 2am and still arrive for work at 6am the next day.

He can take considerable credit for navigating his bank through the 2008-09 financial crisis and coming out with a much stronger international position than many of his peers. "Gref has literally dragged Sberbank into the 21st century," says David Nangle, head of research for Renaissance Capital, the Moscow investment bank. "They set the bar at the next level for other Russian state companies in terms of management, corporate governance, and transparency".

Vladimir Savov of Otkritie Bank in Moscow believes Sberbank's growth is driven by constraints on growing in Russia: "The anti-monopoly authorities would be against any further expansion, at least any big purchases, so going abroad was the best and probably only way for them to grow".

The numbers underline Sberbank's strong performance. Its net profits almost doubled last year to \\$10.8bn. In 2008 before the eurozone crisis, it was the ninth-largest bank in Europe by market capitalisation. At the last count, after Sberbank shares rose more than sixfold from their low in early 2009, the bank was Europe's third-largest, after  HSBC and Santander .

That is partly thanks to the stronger Russian economy, which despite the economic turmoil in its largest foreign market of Europe has grown so far this year at about 4 per cent, thanks to high prices for its oil and commodities exports.

The bank's two foreign acquisitions this year marked the high points of a hectic year of dealmaking – others include a merger with Moscow brokerage Troika Dialog, creating an investment banking arm. It entered into a 70-30 joint venture with  BNP Paribas  to create a consumer credit operation in August. To top it off, in September Sberbank completed  a public offering in London  selling 7.3 per cent of the state's shareholding for USD5.2bn, mainly to US and UK investors.

Mr Gref says it was merely a coincidence that all these deals fell in the same year and that the bank does not plan any major acquisitions for the next three years. "Our main task now is not to buy more, but to integrate the acquisitions we have already made.

"I'm not sure we want to grow any more. When you have children you desperately want them to grow up. But when they are grown, you don't want them to just keep getting bigger".

The two landmark deals marked a watershed expansion of Sberbank into Europe, a goal that has sometimes eluded Russian business. The country's leaders and businessmen mutter darkly that many plans have been thwarted by what they see as political barriers to entry for Russian
companies.

Later, Mr Gref concedes: "Everything we bought in Europe and Turkey, that is thanks to the crisis in the eurozone. They would never have sold these to us if there had not been a crisis. They were forced to sell".

In November 2010, for example, following  the collapse of a deal  to sell a 55 per cent stake in  General Motors,European unit Opel to a consortium that included Sberbank, Vladimir Putin, Russian president, railed against "politically and economically motivated resistance" to Russian companies' attempts to buy into Europe.

But as the eurozone crisis deepened, any such barriers disappeared, as fears of a systemic banking crisis trumped paranoia about encroaching Russian state business interests. Asked if there were any political barriers to Sberbank expanding into Europe, Mr Gref is more cagey.

"During such an economic crisis political limitations go out the window. We don't see any political barriers to expansion in Europe".

So normally, there are political barriers? "We see no barriers to acquisitions in Europe" he repeats firmly, with a wan smile.