SBER.L Regulatory News (SBER)

Sberbank of Russia announces the financial effects from sale of its 99.85% stake in DenizBank A.S.

31 July 2019, Istanbul - Sberbank of Russia ("Sberbank") announces that it has completed the sale of its entire 99.85% stake in DenizBank A.S. ("DenizBank") to Emirates NBD Bank PJSC ("Emirates NBD").

In line with the sale and purchase agreement of DenizBank shares dated 2 April 2019, the total revenue is RUB 170.7 billion, while Sberbank's investments totaled RUB 148.0 billion throughout its ownership. The deal was valued at 1.0х of DenizBank Group's consolidated under BRSA equity as of 31 December 2018. Thus, for the purpose of Sberbank's Russian Accounting Standards (RAS) reporting, gross profit from the sale amounted to RUB 22.7 billion and income tax payable of approximately RUB 4.5 billion.

As a result, the sale will strengthen the Sberbank Group's equity under IFRS by RUB 11.7 billion[1]. On the same basis, the sale of DenizBank is anticipated to generate a preliminary negative result of RUB 70.0 billion including the recognition of DenizBank performance for the first 7 months of 2019. This effect is principally a consequence of the cumulative negative translation adjustments booked in the Statement of Comprehensive Income and recycled through the Statement of Profit or Loss under IFRS (IAS) 21 "The Effects of Changes in Foreign Exchange Rates". The foreign currency translation loss has been driven by Turkish lira (TRY) depreciation of 37% against the Russian ruble (RUB) since the acquisition of DenizBank.

At the same time, the exit of DenizBank from the perimeter of the Sberbank Group will lead to a reduction of risk-weighted assets by 9.0% or ca. RUB 2.8 trillion, with the Group's CET I capital adequacy ratio under IFRS increasing by ca. 120 bps.

The results of the deal will be recognized in the Sberbank Group's third quarter 2019 accounts under both RAS and IFRS.

Under the terms of the agreement, Emirates NBD will purchase DenizBank's subordinated funding to Sberbank in the amount of approximately USD 1.2 billion. Additionally, DenizBank will repay interbank loans previously issued by Sberbank in the region of USD 1.1 billion.

The transaction will result in the total cash inflow exceeding USD 5.0 billion.

Herman Gref, CEO and Chairman of the Executive Board of Sberbank:

"Since 2012, DenizBank has made meaningful progress across all key areas, delivering growth in sales of products and services via digital channels, implementing advanced risk management practices and improving risk culture, showing the ability to shape unique customer experience, as well as maintaining balanced financial structure and meeting the external challenges with confidence. The number of DenizBank clients more than doubled during this period and the assets increased more than 3.5 times. The decision to sell DenizBank is due to the sanction-related restrictions and a corresponding change in Sberbank's international strategy that will allow us to concentrate on further development of our ecosystem in Russia."

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Sberbank

Julia Emm

Press Office  

Tel. +7 495 957-57-21

media@sberbank.ru

Sberbank is Russia's largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank's authorised capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 97,8 million active customers in 21 countries. Sberbank has the largest distribution network in Russia with almost 15,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, India, China and other countries.

The Bank holds the general banking licence No.1481 issued by the Bank of Russia. Official websites of the Bank: www.sberbank.com (Sberbank Group website), www.sberbank.ru.

[1] Includes the sale revenue, the value of net assets sold and the profit tax.