The head of Russia’s biggest bank has criticised the European Central Bank for forcing its eurozone subsidiary to be supervised by officials in Frankfurt and making it raise more capital.
Herman Gref, chief executive of Sberbank, told the Financial Times in a recent interview that “European banking will have a very, very difficult period of time now” because “the regulatory policy is quite difficult”.
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“I can’t understand what they are doing, frankly,” said Mr Gref, a former Russian economics minister who has run Sberbank since 2007. The ECB declined to comment.
Sberbank’s Austrian subsidiary was subjected to a stress test by the ECB in 2015 after being added to the list of banks considered systemically significant along with that of Russia’s VTB and a number of other lenders.
Sberbank and VTB had to inject an extra €240m and €200m into their Austrian units, respectively, after they both failed the ECB stress tests by falling below the minimum capital required under the adverse scenario.
“If you have the push from the market, a squeeze from the regulator and bad macroeconomic conditions, you know, it does affect your health quite badly,” said Mr Gref, arguing that Europe’s tough regulatory stance was handing US banks a big advantage.
“The banking system is in its most dramatic period of its history,” he said. “If you look into the future of the European banks, we think it will be quite a difficult one. American banks have quite a different macroeconomic situation and their regulation is different.”
Sberbank, which is listed in Moscow and London but still majority owned by the Russian government, bought Volksbanken International, a network of branches in eastern Europe including Hungary and Croatia, as part of an acquisition spree in 2012.
It is now slimming down in the region and recently sold its Slovakian operations.
Russia’s biggest lender with assets of Rbs25.9tn ($353bn) has faced “three black swans” this year, according to Mr Gref, a noted proponent of liberal market reforms who was a minister during Vladimir Putin’s first two terms as Russian president.
He said Russia’s three main problems were the drop in the oil price, western sanctions and the slow pace of structural reform.
The rouble fell to its lowest level in more than a year last week as Russians faced a second year of recession in 2016.
But Mr Gref said interest rates and inflation were falling and Sberbank has started to increase its lending to corporate clients.
The bank, which was hit by international sanctions, suffered a sharp outflow of deposits when the Ukraine crisis first erupted two years ago but that has reversed recently as customers of weaker Russian banks moved money to bigger rivals, he said.
In a meeting with investors in London in November, Mr Gref lowered its 2018 profitability and growth targets. But investors focused on his promise to beef up cost-cutting plans and shares in the bank are up 84 per cent this year.
The main reason that the ECB gave for taking over supervision of Sberbank Austria was its “significant cross-border assets”.
But Mr Gref argued that it should have been excluded as it has only €12bn of assets — below the €30bn threshold that the ECB uses when deciding which banks to supervise.
“We had two months of discussions with them and they were very tough,” he said. “We are a small bank in Europe . . . but they still made us a systemically important bank that deserves this check and all the buffers were applied.”
