Volksbank International (VBI) will continue to have its headquarters in Vienna, the vice chairman of the finance institute’s new owner has promised.
Sergey Gorkov, the deputy head of Sberbank’s executive board, said today (Mon) VBI would not leave the Austrian capital. He told the Kurier newspaper the plan was to increase the number of staff from 60 to 100 “and more in the long run”.
Sberbank is Russia’s leading financial institute. The Moscow-based company took over Volksbank AG’s (ÖVAG) international banking subsidiary VBI last week. The signing of the contract had been delayed for months. Sberbank eventually managed to reduce the price of the acquisition to 505 million Euros. ÖVAG bosses hoped to rake in around one billion Euros last year before Sberbank turned out to be the only competitor with serious interest in a takeover.
Sberbank said the takeover price must drop to 505 million Euros due to economic uncertainties in the European Union (EU) and the serious struggles of some of VBI’s branches. The bank prevailed with its argument. ÖVAG chief Gerald Wenzel was pleased about the agreement nevertheless. He told Ö1 radio that the deal was beneficial to his financial firm given the difficult economic circumstances in Europe.
Business newspapers have been speculating that the acquisition of VBI might herald an intense expansion of Sberbank across Western Europe. Now Sberbank’s vice chief has spoken out about the plan’s goals. Gorkov said today his enterprise, which has more than 250,000 employees, was “very interested” in doing business in Poland.
Speaking to Austria’s Kurier newspaper, the banker underlined that there had been no takeover talks with the managers of banks represented in the country yet. VBI is currently not operating in Poland. Asked for his bank’s focus on business outside the EU, Gorkov said Sberbank was having a close eye on Turkey.
The ÖVAG board decided to sell VBI following increasing pressure caused by sky-high losses. The bank, which lost 900 million Euros in 2011, failed to convince Sberbank about taking over VBI’s Romanian representation. Now ÖVAG – which is expected to lay off hundreds of staff of its Austrian department shortly – plans to keep restructuring its ailing subsidiary company on its own to sell it with a profit “in three to five years”.
ÖVAG had to ask the state for cash injections in 2008 to get through the crisis. The bank received around 1.1 billion Euros. Most of the money has not yet been paid back. The Social Democrats (SPÖ) and the People’s Party (ÖVP) agreed that Austria’s leading banks need support to weather the economic hurricane. At the same time, the government decided to introduce an extraordinary tax on the domestic financial institutes. The Federal Constitutional Court (VfGH) rejected a provincial bank’s lawsuit against the levy earlier this month.
The court said the charge was legitimate and just considering the “extraordinary role of banks in the crisis”. Hypo Vorarlberg launched legal action against the SPÖ-ÖVP coalition about the levy since it was ordered to pay the tax despite its decision not to apply for financial support from the government and the Austrian National Bank (OeNB).