* Sberbank CEO in Vienna for bid talks - source
* Sberbank only bidder left for VBI - sources
* Bid level seen testing VBI's resolve to divest assets
(Adds source, background)
By Michael Shields and Ekaterina Golubkova
VIENNA/MOSCOW, June 7 Russian lender Sberbank's
SBER03.MM boss will bid up to 750 million euros ($1.1 billion)
for eastern European bank Volksbanken International (VBI) while
he is in Vienna, a source close to the deal said.
Sberbank Chief Executive German Gref's talks on Tuesday with
VBI parent Oesterreichische Volksbanken OTVVp.VI will test how
low in price Austria's fourth-largest bank is willing to go to
divest assets as it tries to bulk up its balance sheet and pass
European stress tests.
Financial sources familiar with the matter said Sberbank is
the only suitor left for VBI, which Volksbanken put up for sale
in December along with its sister leasing business as a way to
streamline and focus operations.
Gref is also in Vienna to co-chair a regional World Economic
Forum meeting starting on Tuesday.
One source confirmed a report in Austrian newspaper Die
Presse, citing two Russian sources close to Sberbank, as saying
Gref was ready to offer 700-750 million euros for VBI, far less
than the owners hoped.
"The numbers are right but negotiations are still going on,"
the source said, adding no decision was expected on Tuesday.
Another source close to Sberbank told Reuters the figures
cited in Die Presse were not final.
"If the Austrian side agrees on a compromise, the principle
agreement may be reached within a month," this source said,
giving no detail on the compromise but saying it involved
PLAN B DROPPED
Volksbanken has a 51 percent stake in VBI. France's Banque
Populaire Caisse d'Epargne and Germany's DZ Bank/WGZ Bank each
own 24.5 percent of the unit.
Volksbanken had hoped to raise at least 1.8 billion euros --
or 1.5 times equity -- with the VBI sale, a source close to the
transaction said earlier this year. [ID:nLDE71N207]
Volksbanken declined comment, while Sberbank was not
Sberbank, which sources had previously said had the inside
track to buy VBI, said in April it was in talks with Austrian
banks on possible acquisitions. [ID:nLDE73C1OW]
Two sources had said in February a "plan B" scenario had
emerged in which Banque Populaire could buy out other VBI
shareholders, but one source said last week the French had
dropped out, leaving the field clear for Sberbank.
It remained unclear whether the sale would go ahead even
though Volksbanken needs money.
"It is hard to say where the pain threshold lies for
Volksbanken," one source close to the process said.
"This is a test of strength. Sberbank has time but
Volksbanken also has time because the goal of repaying state
capital is a soft target."
Volksbanken, which returned to profit in 2010 as risk
provisions more than halved, is in the process of paying back 1
billion euros it got from the Austrian state during the
The regional cooperative banks that own a majority stake
agreed last month to chip in 300 million euros to repay a
tranche due this year. [ID:nLDE73E1JS]
Volksbanken has said divestments will help it repay tranches
of 300 million due in 2014, and 400 million in 2018.
The bank, one of three Austrian lenders to take part in
European stress tests this year, made a 2010 net profit of 55
million euros, reversing a 1.1 billion euro loss in 2009 after
real estate assets and corporate loans soured.
VBI alone lost 21.8 million euros last year as core market
Romania weighed on the group. [ID:nLDE72308H]
($1 = 0.6845 euro)
(Additional reporting by Sylvia Westall and Angelika Gruber
in Vienna and Arno Schuetze in Frankfurt; Editing by Dan Lalor
and David Hulmes)