Sberbank's promotional display at the St. Petersburg International Economic Forum (SPIEF) 2014.
Photo source: Sberbank of Russia's web site.
Sberbank of Russia
Sberbank is Russia’s oldest
bank and the only surviving one that traces its history back to the Imperial era. The massive bank is today a state-owned
commercial bank but also a publicly-listed company. The bank’s name means “Savings Bank” in
Russian.
In 1841, Russian Emperor
Nikolai I (known as Nicholas I in English) decreed the creation of a savings
bank with offices in Moscow and St. Petersburg to encourage the population to
save and keep safe their excess cash at a bank rather than, say, in a jar in
their homes. A royal court advisor
became the savings bank’s first customer.
Over the next 20 years, the savings bank opened another 45 offices in
nearly all of Russia’s regional capitals.
The bank soon launched
an awareness program to promote its savings account. Despite the campaign, most of the savings
bank’s clients were still wealthy merchants, craftsmen, government officials
and courtiers. The average Russian peasant
or labourer simply wouldn’t possess enough free cash to be put away in a bank, a
situation that was not uncommon at the time even for a vast majority in Western
Europe.
In 1860, Tsar Alexander
II carried out banking reforms and established the Gosbank (The State Bank of
the Russian Empire). The state’s savings
bank was transferred to Gosbank.
Meanwhile, it wasn’t
until the 1880s, some two decades after the abolition of serfdom, that income
and money became more widespread for the vast majority of people in Russia’s
far-flung countryside. Meanwhile,
Gosbank opened a large number of savings bureau desks at customs, telegraph,
and local treasury offices in rural villages.
By 1895, over 3,800 savings bureau outlets served over two million
individual accounts, up from 47 offices and only 140,000 accounts back in 1865. In 1905, the saving bank’s outlets began to sell
insurance, offering a state-operated alternative to private insurance companies.
It is worth noting that Russia’s
savings bank operated in a rather different manner than its counterparts in
Western Europe, which tended to be local and small-scale, and whose mandates were
to make mortgage loans to local town people, or to finance local agricultural,
educational, infrastructural, heritage or charitable projects. Under the control of Gosbank, the Russian
model was state-owned, colossal, nation-wide and aimed to channel savings from millions
of “little folks” into the state coffers.
During the late 19th and early 20th centuries,
Gosbank financed massive railway construction and supported industries using
the low-cost savings amassed from the public.
The Russian government also relied on the population’s deposits in
Gosbank to finance the Russo-Japanese War (1904 to 1905), which, to the shock
of many observers, saw Russia easily and soundly defeated by Japan.
The 1910s were volatile
times around the world. The Industrial
Revolution between 1760s and 1850s transformed the European economy from
agricultural to industrial; and machines in relatively a short period of time
displaced and replaced millions of workers first from the farm, then even in
factories. By the late 19th
and early 20th centuries, millions of poor peasants and workers who
lived in filthy and over-crowded slumps would longer accept the status quo of
being controlled and suppressed by a tiny minority of ruling monarchy,
aristocracy and wealthy industrialists.
This gave rise to a anti-establishment, socialist labour movement across
Europe from Great Britain and Ireland all the way to Russia and beyond.
Meanwhile, the
conservative, feudal and imperialist old guards who had ruled large parts of Europe
for centuries were unprepared and largely still unwilling to adjust to the social,
economic and geo-political upheavals of the industrial age. In June 1914, a Serbian nationalist in Bosnia
opposed to the Austro-Hungarian Empire’s threatening influence over Serbia
assassinated Archduke Franz Ferdinand, setting off World War I one month later.
Imperial Russia’s
failure to address and reform its archaic economic, social and political
structures gave rise to increasing discontent amongst the vast majority of
destitute people. This, combined with
the hardship and famine of World War I, finally boiled over and led to the
February Revolution in 1917, which overthrew the Tsar and created the Russian
Republic. The republic’s provisional
government didn’t last long, however, and eight months later was itself toppled by the
soviets in the Bolshevik Revolution.
The years following the
1917 revolutions were tumultuous in Russia.
The soviets aimed to transform Russia into a state-controlled society in
which private businesses were increasingly threatened. All private-sector banks were shut down and
nationalized in October 1917. Confusion
and distrust over the state’s affairs first led to a sharply reduced purchasing
power of the Russian currency, then a withdrawal of money. The Russian economy reverted back to a barter
system under which food and other basic necessities became extremely scarce,
and the volume of economic activity plummeted.
The role of Gosbank underwent
a period of chaos following the 1917 revolutions, as the Bolsheviks aimed to
abolish private ownership of properties and economic production, and to transform
Russia into a system where the state-capitalist monopoly controls and owns
everything on behalf of the people (“common ownership, hence “communism”). The new Russia was supposed to be classless,
wageless and moneyless: the state would manage the production and supply of
everything, and distribute them evenly and fairly amongst its 95 to 100 million
people. In such a society, the idea of
banking would have been absurd indeed.
In 1920, remnants of the old Gosbank were dissolved. Merely one year later, the unfeasibility of a
moneyless society became apparent, and a new Gosbank was re-established,
becoming the State Bank of the USSR in 1923.
(In 1922, Russia, Ukraine, Belarus and Transcaucasia amalgamated to form
the Union of Soviet Socialist Republics, also known as the USSR or the Soviet
Union.)
In the early 1930s, the
State Bank of the USSR was transformed into a central bank managing money
circulation and regulating short-term credit.
Meanwhile, four sector-specific banks were organized to carry out Soviet
Union’s long-term state economic plans:
Prombank (for industrial development), Sel’khozbank (for agricultural
development), Vsekobank (Co-operative Bank) and Tsekombank (for communal and
housing development).
During the next five
decades, in a typical communist state fashion, banking policies and regulations
switched course several times. Many
functions of Prombank, Sel’khozbank, Vsekobank and Tsekombank were transferred
back to the State Bank in 1959. Four
years later, the savings bank operations also joined the State Bank. By now, the State Bank held central bank functions,
but also acted as a deposit bank and a long-term economic development bank.
In the mid-1980s, reform-minded
Soviet leader Mikhail Gorbachev adopted policies of glasnost (“openness”) and
perestroika (“restructuring”), which led to the separation of functions between
the central bank (State Bank of the USSR) and those banks whose mandates are to
accept deposits and finance economic development. In other words, a model that somewhat
resembles the banking structure in the capitalist world. By 1987, five sectorial banks were (re-)established:
namely Vneshekonombank (Foreign Trade Bank), Promstroilbank (for industrial
development), Zhilsotsbank (for housing development), Agrobank (for
agriculture) and Sberbank. The newly
spun-off Sberbank (Savings Bank of the USSR) served as the umbrella institution
for the many savings banks of the Soviet Union.
Meanwhile, a bureaucratic,
corrupt and de facto bankrupt economy led to the collapse of the Soviet Union in
1991. During the next two decades,
Russia underwent uncertain political, social and economic changes as liberal reformers
fought the ultra-conservative hardliners for control of Russia. Despite this ideological struggle, banking
reforms in Russia did continue and in 1991, Sberbank was restructured into a
joint-stock company named Sberbank of Russia, though it remains state-owned.
With its status as the
incumbent monopoly institution responsible for accepting and safekeeping personal
deposits, Sberbank held 90% of all household savings in Russia in 1990. Though Sberbank’s market share fell in
subsequent years, it has a great competitive advantage over newer, private
competitors due to its majority state ownership and the implied, unlimited
state-sponsored deposit guarantee that comes with it.
Compared with Western
banking systems, Russia’s banks remained rudimentary and backward well into the
1990s. Sberbank, for example, only
installed its first ATMs in 1993; other financial products such as credit cards
were also introduced some two to three decades after its Western counterparts.
As a major step to
transform Sberbank into a market-driven company, shares of Sberbank were
floated on the Moscow stock exchange in 1996.
As of 2014, Bank of
Russia (the central bank) holds 50% plus one share of Sberbank. Sberbank today serves over 100-million
clients through 18,400 branches, 68,000 bank machines and self-serve terminals,
and on-line apps. It operates internationally in Kazakhstan, Ukraine
and Belarus, nine other countries in Central and Eastern Europe, and Turkey.
Recent transaction(s):
- In 2007, Sberbank bought NRB-Ukraine from another Russian bank for USD $15o-million.
- In 2009, Sberbank bought 93% of BPS Bank (originally Belpromstroilbank) in Belarus, renaming it BPS-Sberbank subsequently.
- In 2011, Sberbank acquired Volksbank International AG excluding Volksbank Romania for between Eur 585 million to Eur 645 million (amount dependent on a number of future factors). The sellers were Austria’s Österreichische Volksbanken, German co-operative bank group DZ Bank, another German bank WGZ Bank, and France’s co-operative bank group BPCE. The operations that Sberbank purchased (excluding the Romanian operations) had 291 branches and over 600,000 clients in Bosnia and Herzegovina, Croatia, Czech Republic, Hungary, Serbia, Slovakia and Slovenia. This was Sberbank’s first expansion outside of the Commonwealth of Independent States.
- In 2012, Sberbank acquired 99.85% of Turkey’s DenizBank from Belgium’s Dexia group for TRY 6.47 billion (Eur 2.82-billion, USD $3.50-billion). DenizBank had 592 branches across Turkey and 15 overseas.
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