DEALTALK-Clock ticking on Volksbanken's VBI sale

Thu Mar 3, 2011 7:24am EST

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(For more Reuters dealtalks, click on [DEALTALK/])

* Sberbank CEO comments sow confusion

* "Plan B" for French shareholder to buy VBI - sources

* Time pressing as repayment of state aid looms

By Michael Shields and Arno Schuetze

VIENNA/FRANKFURT, March 3 (Reuters) - Oesterreichische Volksbanken's (OTVVp.VI) divestment of its eastern European arm is turning into a hard sell just when Austria's fourth-biggest lender needs money to start repaying state aid.

Russian lender Sberbank SBER03.MM -- widely tipped as the favourite to buy the Volksbank International (VBI) unit -- threw a cat among the pigeons last week when Chief Executive German Gref appeared to remove his bank from the race.

"We are not in talks about the Volksbank acquisition. The information that came out was not quite accurate," Gref told reporters in Moscow. [ID:nLDE71O25M]

He did not comment on an Austrian newspaper report that he could instead be eyeing a stake in Volksbanken itself.

To help him make a decision, Gref can lean on the views of former UniCredit (CRDI.MI) Chief Executive Alessandro Profumo, who built the Italian bank into a power in central and eastern Europe.

Profumo confirmed to Reuters he is advising the Russian lender but did not want to discuss specific projects.

Gref may just be being coy about VBI -- one source close to the matter said the Russians were still gathering information about the bank -- but VBI has certainly not attracted a feeding frenzy since Volksbanken put its 51 percent stake up for sale in December. [ID:nLDE6B61NG]

France's Banque Populaire Caisse d'Epargne and Germany's DZ Bank/WGZ Bank each own 24.5 percent of the unit, for which the owners have been hoping to get at least 1.8 billion euros ($2.5 billion), or 1.5 times the bank's equity.

That is around three times what one potential bidder had calculated VBI was worth, a source close to the bidder said.

"This is a tough time to be selling a bank," one executive close to the transaction said.

PLAN B?

Two sources close to the sale said a Chinese group had expressed interest in VBI, although an adviser to one party dismissed this as "mere wishful thinking".

A spokesman for Oesterreichische Volksbanken said he could not comment on details of the VBI transaction but added: "We are very satisfied with the current sale process."

Volksbanken is under pressure to raise money to start paying back 1 billion euros in state aid it got during the financial crisis, and is due to pay back 300 million euros of state capital by the end of 2011. [ID:nLDE6B61NG].

The VBI sale has to proceed swiftly enough to ensure the deal gets regulatory approval this year in the 10 emerging European markets where VBI operates, sources have said.

Any buyer needs to be optimistic about prospects in Romania, which accounted for 5.2 billion of VBI's 13.2 billion euros in total banking assets at mid-2010.

It is less strong in other markets in the region where it competes against UniCredit, Erste Group Bank (ERST.VI) and Raiffeisen Bank International (RBIV.VI).

Volksbanken itself is controlled by regional cooperative banks, with DZ Bank DGBGg.F and Raiffeisen also owning stakes.

With talk in the market that VBI may have to be broken up and sold in pieces, two sources said a "plan B" scenario had emerged in which France's Banque Populaire could buy out other shareholders.

"They are in the comfortable position of being able to sit on the sidelines and see how things develop," the source said. (Additional reporting by Christian Gutlederer in Vienna and Vladimir Soldatkin and Ekaterina Golubkova in Moscow; Editing by David Holmes) ($1=.7202 Euro)

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