NoD: CBR participation in Sberbank IPO

The participation of the Central Bank's (CBR) would smooth the process of selling Sberbank pending IPO and prevent the overly rapid reduction of the state's stake in Sberbank. If approved, CBR participation would improve the prospects of the issue and for increasing Sberbank's capital base. The CBR will directly participate and buy RUR70 bln of the roughly RUR200 bln is shares expected to be issued, media speculated. Sizable participation of the CBR in the offering would reduce 'privatization' rational of the deal, but create additional support for the placement - independent of current market situation - by guaranteeing demand for the shares. At the same time, government control over Sberbank would remain strong at least for a time being.

Why this is important: In the view of forthcoming WTO joining, the Russian state maintains it wants to retain control over the key banking assets.