March 15, 2012 / 11:45 AM / 7 years ago

NEWSMAKER-Super-fit CEO of Russia's Sberbank drives a lean machine

* Gref wants staff, Russia’s largest bank to get fit

* State-controlled bank plans $6 billion stock offering

By Katya Golubkova

MOSCOW, March 15 (Reuters) - German Gref, the super-fit CEO of Russia’s Sberbank, drives his staff hard - they are rebuked if they get too podgy and are allowed to leave work early only if they are heading to the gym to tone up.

Kazakhstan-born Gref, an ally of Prime Minister and President-elect Vladimir Putin since the 1990s, has applied the same tough-love philosophy to Russia’s biggest bank, which plans a $6 billion offering of stock to investors.

Since taking charge in 2007, Gref has slimmed staff numbers, pumped up profits and launched an international expansion push that is more likely to be a marathon than a 100-metre dash.

As the global financial crisis pummeled its European rivals, Sberbank climbed from ninth to second place among the region’s banks behind HSBC and now boasts a market value of $76.4 billion.

Gref’s next step is his most important: The planned sale of a 7.6 percent state stake in a deal that would broaden Sberbank’s investor base and, he hopes, achieve a valuation that better reflects the bank’s earnings power.

Two banking sources told Reuters on Thursday Sberbank plans to start a roadshow to sell the stake on April 16.

Gref postponed the deal last September, after turbulence on global markets wiped around $1.5 billion off the value of the stake, which has now recovered to $5.8 billion.

If market conditions allow, the deal might reopen Russia’s stalled privatisation programme, kicking off sales of stakes in other state firms such as oil major Rosneft or shipping firm Sovcomflot.

The central bank, which owns 57.6 percent of Sberbank on behalf of the state - a holdover from Sberbank’s past as the Soviet Union’s savings bank - picked Credit Suisse, Goldman Sachs, Morgan Stanley, JP Morgan and Troika Dialog for the deal.

After the sale, the central bank would retain bare majority control.


Gref, a 48-year-old ethnic German who is married with two children, has hired a management team packed with alumni from consulting firm McKinsey and sought to instill a “work hard, play hard” culture at a bank that was long synonymous with bureaucratic inertia.

“You can’t leave work early. But it is OK if you are going to the gym,” said one employee at Sberbank’s head office, located in an unfashionable Moscow suburb far from the skyscrapers of the Moscow City financial district.

The manager, who requested anonymity, is one of the newcomers brought in by Gref, who has cut staff by over 24,000 or around 10 percent as he seeks to boost efficiency, automate back-office operations and achieve economies of scale.

Gref, who cites the Chinese “Tao” philosophical concept as a guiding force in his career, jogs 10 km every day and tells overweight managers to get into shape. “I haven’t heard that anyone left because of that. But people know his philosophy - a sound mind in a sound body,” another manager told Reuters.

The same applies to Sberbank. Under Gref’s fitness regime, its earnings trebled to over 300 billion roubles ($10.2 billion) in 2011. Sberbank is due to report final full-year results at the end of March.

Sberbank has a robust funding base - its network of 20,000 branches has enabled it to control nearly half of Russian household deposits - and Gref’s focus on efficiency has helped it achieve enviable underlying profitability.

The bank’s return on equity was 27.6 percent in the third quarter of 2011, the latest period for which detailed results are available - up from 22.5 percent in 2007. That is far better than its closest peer, state-controlled VTB.

At the beginning of his term in Sberbank, Gref promised “to teach an elephant to dance”. He has cut the enormous queues at branches and hour-long waits for an answer at Sberbank’s call-centre. But insiders say he wants to achieve more.

“He always seems dissatisfied,” another top manager said.


Gref last year launched Sberbank’s transformation into a universal bank with international ambitions, buying Moscow brokerage Troika Dialog in a deal worth $1 billion.

But, rather than snapping up large foreign banks laid low by the credit crunch, he has preferred to follow Russia’s strategic and business interests by making smaller bolt-on acquisitions in eastern and central Europe.

Sberbank last month closed a deal to buy the eastern European arm of Austria’s Volksbanken AG for $660 million and bought Swiss SLB Commercial Bank for $80 million at the end of 2011.

By 2014, Sberbank plans to make at least 5 percent of its net profit from its foreign operations.

Gref was born on Feb. 8 in 1964 in a small village in Kazakhstan and became a lecturer after getting a law degree in Omsk, a Siberian town near the Kazakh border.

His career took off after he moved to Russia’s second city, St Petersburg, to continue his education. He started work in the early 1990s at City Hall, where he met Putin, then a senior aide to Mayor Anatoly Sobchak.

Putin, first elected as president in 2000, brought Gref into government as economy minister. Under the so-called Gref Plan, the government cut income tax to a flat rate of 13 percent and reformed Soviet-era laws banning private land ownership.

Gref was a key player in Russia’s epic bid to join the World Trade Organization, which reached a successful conclusion when 18-year entry talks were finally wrapped up in December.

He oversaw economic policy at a time of political stability and rising oil prices that helped Russia’s economy to grow by an average 7 percent a year before it contracted sharply in the wake of the 2008-09 crash.

He took the helm at Sberbank in late 2007 and recently extended his four-year contract, despite speculation that he might return to the government after Putin won a third Kremlin term at a March 4 election.

Gref dismissed such suggestions in late December.

“I’m not a politician and I have no political ambitions ... I’m sticking to Tao philosophy, where internal but not external development is important,” he said.

“I’m living ‘the way’ as a hired manager. If shareholders one day show me the door - my task would be to hand over responsibilities in the best possible way. That’s my task and it’s there that my professionalism lies.”

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