UPDATE 1-Russia's Sberbank approves dividend policy up to 2020 -CEO

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MOSCOW, Dec 12 (Reuters) - Russia’s largest lender Sberbank said on Tuesday its board had approved a new dividend policy and new development strategy for the period up to 2020.

Russian authorities are trying to squeeze more dividends from state companies in a bid to close a budget deficit brought about by weak oil prices and a two-year economic downturn.

The government accordingly has ordered state firms to pay 50 percent of their earnings in dividends, but met resistance from some of the country’s biggest oil and gas producers and banks.

Russia’s central bank owns 50 percent plus one share in Sberbank and transfers the money it gets from Sberbank dividends to the state budget.

Chief Executive Officer German Gref told reporters a new dividend policy had been approved but declined to provide any further information. Sberbank is to hold an investor day in London on Thursday where more details are expected to come out.

Sources familiar with discussions between Sberbank and the government told Reuters in November the plan was for the lender to pay 40 percent of its earnings in dividends in 2017, gradually rising to 50 percent by 2020.

The Russian Finance Ministry also said in June it expected the budget to receive 150 billion roubles ($2.5 billion) in dividends from Sberbank next year, versus the 67.8 billion rouble forecast for this year.

Sberbank’s 2016 dividends were the highest in the bank’s history, amounting to 25 percent of its net profit.

Sberbank has outperformed rival Russian banks since 2014, when the Russian economy fell into a deep slump, and is seen as a safe haven by investors at a time of intense scrutiny on the Russian banking sector after the central bank bailed out two of the country’s largest private lenders earlier this year.

Sberbank holds around a third of total banking sector deposits in Russia, meaning it is less dependent on more costly central bank financing than other Russian banks, and its pricing power on loans is unmatched.

Speaking to reporters in Moscow, Gref said he believed the Russian central bank would make further cuts in its key interest rate in 2018, but also that he saw inflationary risks next year.

The central bank is widely expected to lower its key interest rate to 8 percent at on Friday, in what would be the sixth rate cut so far this year.

Reporting by Tanya Voronova and Jack Stubbs; writing by Dmitry Solovyov and Jack Stubbs; Editing by Katya Golubkova/Mark Heinrich