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19 Vavilova Street
117997 Moscow
Telephone: (+7) 095 957 58-62
Fax: (+7) 095 957 57-31
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Public Company
Incorporated: 1991
Employees: 210,000
Total Assets: $34.2 billion (2003)
Stock Exchanges: Russian
Ticker Symbol: SBER
NAIC: 522110 Commercial Banking; 522120 Savings Institutions

Sberbank is Russia's oldest and largest bank. It is particularly dominant in the field of individual savings accounts, holding about 65 percent of household deposits nationwide. With more than 20,000 branches, its network pervades Russia's far-flung territory from the commercial center of Moscow to small provincial villages where it is often the only bank available for individual savers. Sberbank is the successor to the savings division of the Soviet central bank, which in turn traces its roots back to a network of private savings institutions that was created by tsarist decree in 1841. Sberbank was privatized in 1991 but retains close ties to the central government. Russia's Central Bank holds about two-thirds of its shares, and Sberbank is the only bank in Russia to benefit from a government guarantee on deposits. During the economic tumult of the 1990s, Sberbank's reputation for security and its ubiquitous branches made it the first choice for private savers in Russia, despite low interest rates that sometimes failed to keep up with inflation. More recently, Sberbank has been transforming itself into a universal commercial bank and a prime source of finance for Russia's large oil and natural resources enterprises. The bank now offers a full range of savings, investment, and lending services.

Savings Offices in Tsarist Russia

Tsar Nicholas I established the first private savings institutions in Russia in 1841 when he approved a statute "for the purpose of providing a means for people of every rank to save in a reliable and profitable manner." The next year, savings offices opened in the state treasury departments in Moscow and St. Petersburg. Over the next 20 years, about 45 such offices opened in nearly all of Russia's regional capitals. The State Bank of Russia, or Gosbank, was formed in 1860 and the savings offices were soon transferred under its jurisdiction.

Prior to 1861, the growth of private savings was limited by the fact that the majority of Russia's population was composed of serfs, agricultural laborers who were tied to the land and had few personal freedoms. The only people likely to take advantage of personal savings accounts came from a small class of urban merchants and craftsmen. In 1862, there were only 140,000 deposit accounts totaling 8.5 million rubles in a country of 70 million people. After the abolition of serfdom in 1861, savings accounts became more widespread. Growth was particularly rapid in the 1880s, when the central offices at Gosbank were supplemented by regional offices at local treasuries and telegraph stations. Savings offices opened in rural villages as well as urban centers, leading to a total of 4,000 branches and two million individual accounts in 1895.

Gosbank carried out a variety of lending activities using the funds deposited in savings accounts. To a greater degree than in other European countries, the state bank was used an as instrument to direct economic growth. Gosbank provided loans to the railroad and manufacturing industries under risky terms that were similar to state subsidies and occasionally waived repayment of loans for industries that were considered vital to the nation's economy. Other funds were directed toward war enterprises or used to prop up the failing system of aristocratic land ownership. The government's close control of the banking sector under the tsars foreshadowed the centrally controlled economy of the Soviet period.

The Russian Minister of Finance Sergei Witte carried out a monetary reform in 1895 that led to the adoption of the gold standard for the ruble. A special division, the Department of State Savings Offices, was also established at Gosbank for individual savings accounts. Its first director was A. Nikolsky, a Senator, member of the State Council, and the head of Gosbank. Russia's stable currency attracted foreign investment, which led to economic growth and increased deposits in savings accounts. Total deposits were about 660 million rubles in 1900.

During the 1905 war with Japan, war expenses were primarily covered with the household savings deposits at Gosbank. World War I, on the other hand, was financed through the printing of money. The money supply in Russia grew ten times during the war, fueling hyperinflation and a severe devaluation of private savings. As public discontent grew, the Bolsheviks seized control in October 1917.

Centralized Banking in the Soviet Era

In Vladimir Lenin's view, banks were an important framework for the building of a socialist society. He believed the ready-made big banks of capitalism could be converted into an effective apparatus for state control of the economy. However, banking activities ground to a halt in the chaos of the years immediately following the revolution. All commercial banks closed down in October 1917. Their staff received salaries but were instructed not to perform any banking functions in the hope that economic paralysis would bring down the Bolshevik regime. Nevertheless, by the end of the year, the Bolsheviks had succeeded in nationalizing all commercial banks, sending armed detachments to occupy their offices in Petrograd. While business accounts were confiscated, private savings accounts were respected. Commissar of Finance V. Menzhinsky ordered the re-establishment of the Department of Savings Offices. However, his efforts to maintain the private savings system failed during the period of Revolution from 1918 to 1921. Throughout those years, farm and consumer goods were requisitioned, nearly all money was withdrawn from the economy, and the exchange of goods operated on a barter system.

In 1921, the New Economic Policy was implemented to normalize commodity exchange in the now ruined economy. The economists G. Sokolnikov and L. Yurovsky at the People's Commissariat for Finance carried out a monetary reform to replace the Soviet banknotes that had been massively overprinted in the preceding several years. Recalling the reliable gold chervonets of tsarist times, they introduced a new gold-backed chervonets as a parallel currency. By 1924, the chervonets pushed out the old Soviet banknotes and became the sole currency. The State Bank of the USSR, or Gosbank, was established in 1923 and the network of savings banks was reconstituted. Encouragement of savings was a government priority in the late 1920s. The state targeted the general population with the magazine Sberegatelnoe Delo, or "Savings Business," which contained articles by leading government planners.

Control of savings banks was transferred to the People's Commissariat of Finance in 1929. The first Five-Year Plan of 192832 set ambitious targets for the promotion of personal savings, but the plan was only about 50 percent fulfilled since few people had any money to save. The situation improved under the second Five-Year Plan. Total deposits grew five times between 1935 and 1940 and reached prewar levels. Meanwhile, the Credit Reform of 193032 led to the formation of a system of specialized banks under Gosbank, each with a particular sphere of responsibilities. This system remained basically unchanged through most of the Soviet period.

The savings banks played a large role in funding Russia's involvement in World War II. Not only did they provide loans to the war effort, they also accepted donations from the populace for the defense effort and sold tickets for government-run lotteries that raised money for the war. A rationing system was in place during the war; in 1947, it was repealed and a money reform was carried out in which ten old rubles were exchanged for one new ruble. Those who put their money in savings banks, however, enjoyed a more favorable exchange rate. The network of savings bank branches, which had fallen by half during the war due to occupation of Russian territory, returned to prewar levels by 1952. There were about 42,000 branches in all. They remained under the jurisdiction of the Ministry of Finance, with soviet committees supervising local offices.

Savings offices were transferred to Gosbank, the state bank, in 1963. Gosbank now operated as simply an extension of the government's monetary and economic policy. It carried out all the functions of a central bank as well as a commercial bank: printing money, controlling the money supply, providing credit for industrial enterprises, operating private savings accounts for individuals, and taking care of the accounting and money transfer needs of the federal budget. Citizens brought their money to Gosbank's savings offices because they had no other option. In 1965, economic reforms were implemented to improve planning and make industry more responsive to demand, but the banking system remained fundamentally unchanged. Government funds were being drained by inefficient projects and military enterprises, so no amount of reform was able to significantly stimulate the economy. The years 1970 to 1985 were a period of economic stagnation, and personal savings stagnated as well.

Company Perspectives:

The Bank's mission is to meet requirements in banking services of high quality and reliability of each client, including private, corporate, and government entities, on the entire territory of Russia, ensuring stable functioning of the Russian banking system, public savings, and their investment into the real sector of the economy contributing to the development of the Russian economy. The Bank's motto is to be the "home bank" for the private depositor, respected by the corporate client, a reliable supporter and ally to the state, and a recognized authority on the international level.

In the mid-1980s, Mikhail Gorbachev launched programs of "perestroika," or restructuring, and "glasnost," or openness. Deposits at savings institutions began to increase and a major reorganization of the banking system was implemented in 1988. Gosbank was turned into a central regulatory institution, while five separate banks were created with specializations in particular economic spheres such as foreign trade, agriculture, and loans to industry. One of the newly created banks was Sberbank, whose responsibility was to operate a savings and loan system for workers and average citizens. Sberbank was structured as an umbrella institution for the 15 savings banks of the USSR's republics.

Other banking reforms were carried out at the same time. Commercial and cooperative banks were allowed for the first time. More than 200 were established in two years, although they attracted only a small number of depositors. Checks were introduced in 1987 but failed to catch on since stores would accept only hard cash for their scarce goods. Personal bank loans were also made available. At the time, however, the problem in the Soviet economy was not a shortage of cash but a shortage of goods on which to spend it.

Becoming a Joint Stock Company in the Early 1990s

In 1990, as the Soviet Union was falling apart, Boris Yeltsin, president of the Russian Republic, declared the Russian Republic Savings Bank (a unit of Sberbank) to be the property of the republic. Yeltsin worked with the bank's chairman, Pavel Zhikarev, to privatize the Russian Sberbank in 1991. It was organized as a joint stock company comprised of about 76 regional banks, each with its own particular way of operating. Price controls on consumer goods were removed in 1992, leading to rapid inflation; Sberbank froze depositors' accounts early that year to prevent further growth in the money supply. In 1993, Zhikarev, who had been the bank's chairman for 25 years, was replaced by the deputy chairman Oleg Yashin. The Russian Central Bank acquired a majority state in Sberbank by 1993. The Central Bank and the Finance Ministry made attempts to acquire nearly full control over Sberbank in the early years of its existence, but in the end parliament determined that it should remain an independent entity. Full privatization, however, was postponed indefinitely in 1995 when rumors surfaced that a Russian tycoon with a failed bank in his past was planning to gain control of Sberbank.

The newly privatized Sberbank was a sprawling entity with over 40,000 branches and nearly 90 percent of household savings. Even though it paid interest rates that were often lower than the rate of inflation, Russians who wanted a bank account continued to bring their money to the familiar Soviet institution. Many citizens preferred to keep their savings at home in dollars. Sberbank was saddled with some unprofitable operations, such as the processing of payments for public utilities and the operation of branches in provinces that were served by no other bank. Nevertheless, its dominance of the retail savings market allowed it to operate at a profit. Sberbank used its massive cash reserves to make loans to smaller banks that lacked a substantial deposit base. It also invested heavily in government bonds, known as GKOs.

Smaller commercial banks, of which there were about 2,000 in the early 1990s, were more efficient and adaptable than Sberbank and more attractive to private businesses. In the early 1990s, only about two percent of deposits at Sberbank came from business enterprises. The commercial banks also started to attract more retail customers by paying higher interest rates. By 1995, Sberbank's share of household savings had fallen to about 60 percent. However, later that year savers poured their money back into Sberbank when a crisis of confidence shook the commercial banks. Interbank lending was suspended when some banks appeared to be insolvent. Even though its accounts offered less favorable terms, Sberbank was the only bank backed by a government guarantee on all deposits. Consumers chose stability over profit, and Sberbank's share of households deposits once again rose to over 70 percent.

Meanwhile, Sberbank was modernizing and adding services. It signed deals with Hewlett Packard and Unisys in 1994 to computerize all its branches and implement a central clearing system. Its first ATM opened that year at Moscow's Sheremetyevo airport. Sberbank was also remodeling some of its branches in marble and glass in order to dispel their reputation for dinginess. In the mid-1990s, the bank started construction on a lavish new headquarters in the center of Moscow.

Andrei Kazmin became the chairman of Sberbank in early 1995. As former deputy finance minister, he had close ties to the Central Bank. His vision for Sberbank was elaborated in the bank's four-year Concept of Development presented in 1996. Kazmin wanted to transform Sberbank into a universal commercial bank and expand services to corporate clients while maintaining a special focus on retail banking. At the time, Sberbank was heavily invested in treasury bonds, or GKOs, holding about 50 percent of them. The strategy was profitable for the time being but would be disastrous if the government changed its firm ruble policy. Sberbank's 1996 profit was estimated at $2.7 billion.

In early 1997, foreign investors took an interest in Sberbank as Russia seemed to be achieving economic stability. Sberbank's market capitalization was so low that, at $20 a share, an investor could buy the equivalent of a branch for $5,000. William Browder at the Russian investment company Hermitage Capital Management called attention to the company and shares rose to $323 in August 1997. A year later, an economic crisis struck Russia when the government allowed the ruble to be devalued. Once again, citizens' savings were made nearly worthless, and many commercial banks were wiped out. Sberbank, however, came through the crisis in good shape. Early in 1998, it had taken advantage of a government offer to swap ruble-denominated GKOs for dollar-denominated Eurobonds, even though returns were far lower. As a result, its financial condition was not severely damaged by the devaluation.

Key Dates:

A reorganization of the Russian banking system leads to the creation of Sberbank, a specialized bank for private savings.
Sberbank becomes a joint stock company.
A crisis at commercial banks increases Sberbank's dominance of the individual savings market.
Depositors at other banks are allowed to transfer accounts to Sberbank after the August economic crisis.

After the 1998 Crisis

Amid the 1998 crisis, the Russian government introduced a program allowing depositors at the largest banks, such as Inkombank, SBS-Agro, MOST-Bank, and Menatep, to transfer their accounts to Sberbank and take advantage of the government deposit guarantee. However, dollar accounts would be transferred at an unfavorable rate based on the pre-crisis value of the ruble. Sberbank gained about 440,000 new accounts, moving its share of individual accounts to about 85 percent and of corporate accounts to 20 percent. After the crisis, Sberbank continued to shift its focus away from GKOs and toward investment in the private sector of the economy. Its loan portfolio increased between two and three times in 1999 as it lent large amounts to oil, natural gas, and mining concerns. The International Monetary Fund (IMF) became concerned that Sberbank was making itself overly vulnerable to problems at any one of its major borrowers. The IMF asked Sberbank to allow a probe of its loan portfolio as a condition for further loans to the Russian government. In July 2000, Sberbank finally agreed to one of the IMF's demands and published results according to international accounting standards, reporting a 1999 profit of $285 million. However, the report failed to give the details that the IMF was seeking.

Over the past several years, Sberbank had been closing unprofitable branches in smaller communities and brought its total network to under 20,000 in 2001. Also that year, a controversial share issue led to a minority shareholder rebellion. William Browder of Hermitage Capital Management claimed that the proposed 35 percent capital increase would dilute shareholder value while offering shares far below book price. Nevertheless, Sberbank disregarded calls for an extraordinary general meeting and moved ahead with the issue.

Since 2000, the Central Bank had been discussing a bank reform that would institute deposit insurance for all banks, cutting back on Sberbank's powerful monopoly. Intense negotiations led to agreement by 2002 on how such a system would be organized, but the scheme failed to pass in the 2003 session of parliament. In 2003, a dispute erupted involving criticisms made by Vadim Kleiner, one of Sberbank's independent directors. Kleiner was the head of research for Hermitage Capital Management, which was known for an "activist" stance on corporate matters. In a presentation at a London banking conference, Kleiner claimed that Russian citizens were in effect subsidizing the country's wealthiest businesses, since Sberbank paid very low interest to account holders and then made loans to companies like Gazprom, Rosneft, Lukoil, and Russian Aluminum below the market rate. He also asserted that Sberbank was inefficient and overstaffed. Even though his comments were based on Sberbank's own reports, the bank sued Kleiner and the newspapers that published his comments. A higher court eventually ruled against Sberbank.

In late 2003, Sberbank placed a $1 billion Eurobond that was the first by a Russian company to receive an investment-grade rating. The bank's large cash reserves and government guarantee made an apparently reliable investment. Nevertheless, the makeup of Sberbank's loan portfolio remained the greatest concern for analysts as the bank entered 2004. The Moscow Times suggested that, due to its large number of private depositors, Sberbank had more money than it could lend responsibly and was pressured to make risky loans. The Central Bank pushed Sberbank to adhere to requirements related to diversification of its loan portfolio. Sberbank insisted that its loan portfolio was reasonable and that it had always followed diversification requirements. Russian citizens, meanwhile, were gradually putting more money in private banks even without a deposit guarantee, and Sberbank's share of household savings once again fell to under 70 percent. The bank's Concept of Development for 2000 to 2005 called for improvements in customer service.

Principal Competitors

Alfa Bank; Rosbank; MDM Bank; Deutsche Bank AG.

Further Reading

Aris, Ben, "Central Bank Cracks on with Sector Reform," Banker, December 2002, p. 43.

Belton, Catherine, "Sberbank's 1999 Profits Top $ 285M," Moscow Times, July 1, 2000.

, "Sberbank Sues to Silence Its Critics," The Moscow Times, May 26, 2003.

, "Too Much Cash Could Break the Bank," Moscow Times, May 27, 2003.

Bush, Jason, "A Renaissance in Retail Banking," Business Week, September 1, 2003, p. 45.

Clover, Charles, "Sberbank Agrees to Accounting Benchmark," Financial Times (London), July 11, 2000, p. 34.

Evans, Jules, "Vadim Kleiner: Director of Research, Hermitage Capital Management," Euromoney, March 2003, p. 30.

Fak, Alex, "Bank Insurance Bill in Danger of New Delay," Moscow Times, November 21, 2003.

Gall, Carlotta, "Sberbank Fights State Encroachment," Moscow Times, November 25, 1994.

Garvy, George, Money, Financial Flows, and Credit in the Soviet Union, Cambridge, Mass.: Ballinger Publishing Company, 1977.

"Into the Fray: Sberbank," Economist (U.S.), May 29, 1993, p. 86.

Jack, Andrew, "Russian Savers' Bank Accounts Unfrozen," Financial Times (London), December 5, 1998, p. 2.

, "'No Oligarch' at Sberbank," Financial Times (London), April 30, 2001, p. 17.

Korchagina, Valeria, "Court Backs Vocal Sberbank Director," Moscow Times, October 23, 2003.

Larsen, Poul Funder, "Sberbank Plans a More Aggressive Portfolio," Moscow Times, June 25, 1996.

Lascelles, David, "Curb on Soviet Commercial Banks," Financial Times (London), February 12, 1990, p. 24.

Lyons, Ronan, "Russia's Sleeping Giant," Euromoney, January 1998, pp. 9496.

"A New Central Banker Could Revive Russia's Banks," Business Week, April 1, 2002, p. 29.

Peel, Quentin, "Soviet Citizens to Get Bank Loans," Financial Times (London), July 14, 1988, p. 2.

"The People's Plastic: Russian Credit Cards," Economist (U.S.), February 12, 1994, p. 82.

Roberts, Adrienne, "Sberbank Deal a First by Russian Borrower," Financial Times (London), October 16, 2003, p. 35.

Semenenko, Igor, "Sberbank Posts '98 Profit of $660M," Moscow Times, March 17, 1999.

Thornhill, John, "Nation's Piggy Bank Holds Up Russian System," Financial Times (London), March 27, 1996, p. 2.

, "Bank Attracts Western Credit," Financial Times (London), October 4, 1997, p. 2.

Sarah Ruth Lorenz

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Sberbank (the Savings Bank) was the monopoly, state-owned household savings bank of the USSR. It retained both its state ownership and its dominance of the retail banking market in the post-Soviet period, despite increasing competition from commercial banks. In the Soviet period, Sberbank's retail banking network encompassed approximately 70,000 branches and smaller "cash offices" (sberkassy) on almost every corner across the Soviet Union. The Ministry of Finance directly controlled this network until 1963, when it was incorporated into Gosbank (the state bank of the USSR). Sberbank's main task was to collect the individual deposits and invest them with the state. In addition, Soviet citizens paid their bills and picked up their pension checks at their local Sberbank offices.

After the breakup of the USSR, Sberbank Russia became a quasicommercial savings bank, with the Central Bank of Russia as its majority shareholder. Sberbank continued to invest a high percentage of its resources with the government (e.g., in government securities), giving it the nickname "the Ministry of Cash." Although commercial banks began to compete with Sberbank for retail deposits, Sberbank's share of the retail market never fell below 60 percent in the 1990s. This occurred for three reasons. First, no new bank could compete with Sberbank's extensive branch network. Second, the government explicitly insured deposits in Sberbank, while commercial banks had no deposit insurance system. Third, repeated commercial banking crises made Sberbank appear to be a safer choice than other banks. However, it bears noting that the vast majority of Russians chose to keep their savings outside of the banking system entirely.

See also: banking system, soviet; gosbank; stroibank


Johnson, Juliet. (2000). A Fistful of Rubles: The Rise and Fall of the Russian Banking System. Ithaca, NY: Cornell University Press.

Tompson, William. (1998). "Russia's 'Ministry of Cash': Sberbank in Transition." Communist Economies and Economic Transformation 10(2):133155.

Juliet Johnson

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