KOMMERSANT. Swedbank plans to sell its retail assets in Russia and close all branches, retaining only its head office that serves corporate customers, business daily Kommersant writes quoting sources close to Swedbank, a Russian subsidiary of the Russian lending institution. A buyer (Raiffeisenbank) has already been found for some assets held by Swedbank, the newspaper’s sources say. According to them, Raiffeisenbank has already bought Swedbank’s retail credit portfolio in Kaliningrad. Raiffeisenbank and Swedbank did not confirm the closing of the deal.
“The portfolio includes all retail products that Swedbank sold in Kaliningrad,“ notes Leonid Kachalov, deputy head of retail customer service at Raiffeisenbank. “The decision to sell the portfolio is driven by the plans to close a branch in the city,” comments Swedbank management board chairwoman Elena Lozovaya adding the lender’s retail credit portfolio in Kaliningrad equals around Rub 600 mln. As of July 1, 2011 Swedbank’s retail credits totaled Rub 4 bln. The parties declined to disclose the transaction price. “The portfolio was sold at a good premium, its quality was fairly high," a source close to Swedbank told the newspaper, adding several market players, Orient Express Bank in particular, made claims to buy the asset. However, the portfolio’s returns are relatively modest, therefore only a bank with cheap funding can afford to service it, the newspaper’s source added. Retail customers who hold accounts at Swedbank are expected to be offered economic incentives to close accounts at the bank.
Swedbank is a 100% subsidiary of Swedish group Swedbank. Since 2005 Swedbank has rolled out in Russia universal banking business oriented to big corporate clients and households. The bank lent developers heavily (as of early 2009 these credit facilities accounted for roughly 80% of the portfolio). In May 2007 the bank became a Top 100 lender and began to roll out retail operations aggressively in 2008. However, last summer this project was closed: the strategy was changed because of the crisis when its parent company, due to substantial government support, was forced to cut its market presence. Speculations emerged on the market at the end of 2009 that the Swedish shareholders want to divest the Russian asset. Finnish lender Pohjola Bank was called the most likely buyer, but the deal fell through. In February 2010 EBRD pulled out of the bank, selling a 15% interest in Swedbank to a Swedish group. In the first half of 2011 Swedbank generated Rub 803 mln profit.
Russian divisions of foreign banks that decide to leave the Russian market due to changing market conditions do not always succeed in selling their assets. For the record, the subsidiary bank of UK-based HSBC that rolls down retail operations in Russia sold its portfolio to Russia-based Citibank, while BNP Paribas’s subsidiary Cetelem will roll out operations in partnership with Sberbank. However, there are quite opposite examples: it is known that British lender Barclays has not yet made final arrangements over the sale of its Russian division. The situation is also uncertain at KBS that also voiced intention to sell Absolut Bank, but no investor has been found so far.
Swedbank plans to sell all its retail assets, close its Saint Petersburg branch, and also all offices, except the head office. “Swedbank expects to sell its retail portfolios in Moscow and Saint Petersburg till the end of 2011, and the buyer will most likely be also Raiffeisenbank," a source familiar with the matter told the paper. However, the paper’s source at Swedbank said no decision to sell retail portfolios in other cities has been adopted so far.
