UPDATE: Source: Ukrainian regulator may block sale of Sberbank’s local unit

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MOSCOW/KIEV, Mar 29 (PRIME) -- Ukrainian regulators may not allow Russia’s top bank Sberbank to sell its local affiliate, but the bank hopes this will not happen, a source in Sberbank told reporters on Wednesday.

On Monday, Sberbank said it sold 100% in the Ukrainian affiliate to a consortium of Latvia’s Norvik Banka and a Belarusian private company, and expects the deal to be closed until the end of June. Later Norvik Banka said that the majority shareholder of the consortium is Said Gutseriyev, a son of tycoon Mikhail Gutseriyev. Kommersant business daily reported on Wednesday that Sberbank sold its Ukrainian unit for U.S. $130 million.

“We do not rule out a scenario when the Ukrainian authorities do not approve the deal due to this or that reason. But we hope this will not happen. We are in constant contact with the management of the National Bank of Ukraine, and we expect them to help us leave the market as fast as possible,” the source said.

The deal must be approved by Ukraine’s National Bank, the Antimonopoly Committee, the securities commission, and the central bank of Latvia as Norvik Bank is a Latvian bank. “If any authority fails to approve the deal, the deal will break through,” the source said.

Still, the bank is ready to close the deal very soon after regulators have approved it, and under the optimistic scenario the deal will be closed between late April and late May, the source said.

The deal is not profitable for Sberbank. It was done very fast and under pressure from sanctions of the Ukrainian government and even from threats of death sent to personnel of the Ukrainian affiliate by local nationalists.

The bank had to suspend work of five Ukrainian offices -- in the cities of Dnipro, Zaporozhye, Sumy, Vinnitsa and Kiev – due to violent protests by nationalists on March 24 that followed Sberbank’s decision to provide services to holders of passports of self-proclaimed Donetsk and Luhansk republics.

On Wednesday, the operations resumed. “All branches are operating,” a bank representative in Kiev said.

Only a Russian Accounting Standards report will reflect the financial damage of the sale, while the impact on the financial results calculated under International Financial Reporting Standards will be insignificant, the person said.

The source also said that investors will buy Sberbank’s unit in Ukraine with their own money, and not with borrowed funds.

Sberbank is also still looking for a buyer for VS Bank, which is a Ukrainian subsidiary of Sberbank’s European subsidiary Sberbank Europe AG. VS Bank is not a direct subsidiary of Sberbank, and not part of the deal with Norvik Banka and the Belarusian company. “We hope that we will be able to strike a deal soon,” the source said.

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