Banking for the people - Sberbank has 62% of retail bank
accounts in Russia but only 29% of total savings
Sberbank, the largest retail bank in Russia, announced plans last week to become a publicly traded company, according to RIA Novosti news agency. According to the company website, Sberbank currently holds 62% of consumer bank accounts, 29% of total deposits and 50% of retail and 32% of the commercial loans in Russia. For the IPO Sberbank plans to sell 3.5 million shares worth an estimated $11.5 billion.
In Moscow and St. Petersburg, Sberbank’s green signs are ubiquitous and there are branches and ATMs in almost every neighborhood.
The dream of home ownership - mortgage lending is growing in Russia, along with home improvement
Like the rest of the Russian banking industry, Sberbank has come a long way since the ruble default of 1998, a financial meltdown which collapsed several banks and wiped out the savings of millions of ordinary Russians. Even today, with runaway inflation tamed to single digits and the banking system stabilized, many Russians continue to distrust banks and keep their wealth tied up in physical assets such as real estate or cars. However, these habits are slowly changing, as millions of Russians now aspire to obtain mortgages to buy their own apartments.
During his press conference last week, President Vladimir Putin was asked about the relatively high cost of mortgages in Russia (with home loan interest rates running at 11%) by a reporter from the Interfax news agency. Putin answered that interest rates cannot be expected to drop until inflation, currently running at 9% a year (nearly three times the U.S. rate of 3% per year), is also reduced. The Russian President added that when he took office in 2000, inflation was much higher (during the 1998 financial crisis the ruble lost 84% of its value) and has been drastically reduced. In the same press conference, Putin mentioned that average Russian wages increased by over 13% in 2006.
Read the full RIA Novosti article here.
