VEDOMOSTI. Sberbank of Russia hopes to pay back the Rub 500 bln subordinated loan to the Central Bank of the Russian Federation in a month. Other banks that raised similar loans fr om VEB are in no hurry to do so, Vedomosti business daily wrote Tuesday.
Last Friday Sberbank of Russia sent a letter to the CBR board chairman seeking permission to repay in the near future the total amount of the subordinated loan, the bank’s deputy management board chairman Anton Karamzin told the newspaper. Sberbank will need to submit a formal application with a set of documents to CBR for official approval by the regulator. This will be done in the days to come, Karamzin assured. The regulator’s approval procedure exists to protect a borrowing bank against the possible pressure that creditors could put seeking premature loan repayment, therefore Sberbank sees no hurdles for this approval, Karamzin said: “We expect to make the full repayment within the shortest period possible and most likely this is a matter of few weeks”.
Sberbank CEO and board chairman German Gref complained many times that the subordinated credit raised at 8% for 11 years is the bank’s most expensive liability. As lending stagnated, Sberbank had to hold most of funds in CBR bonds that yield less than 5%. It would make sense for Sberbank to keep the credit only if its rate is reduced to this level, the lender’s executive said. However, vice PM and finance minister Alexei Kudrin noted recently that interest rates on subordinated loans will not be reduced.
It makes no sense for other 17 banks that took subordinated loans (issued by VEB) to repay them ahead of schedule, Renaissance Capital analyst Maxim Raskosnov noted. The average cost of borrowing for Sberbank is 5% and it was 7—7.5% for Bank VTB in 2009, he said (Bank VTB management board chairman Andrei Kostin already said his bank has no intention to seek authorization to pay back the Rub 225 bln subordinated loan ahead of schedule). These subordinated loans cost more to other banks and there’s practically no place where they can take them for a decade, Raskosnov concluded. Representatives from the majority of these banks confirmed premature repayment of subordinated loans is not under review. In case of premature repayment of subordinated loans at least six banks could face problems with capital adequacy and risk per borrower, head of research at BCF-Bank Maxim Osadchy pointed out.
