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“The Ministry of Paying Money”

Charles Glover of the FT blogs about the share sale in Sberbank, representing the tastiest slice of Russia’s next wave of privatizations.

Sberbank was created out of the old Sberkass system which handled state salaries in Soviet days: it was “the ministry of paying money” according to Gref. (…)

The bank is 60 per-cent-owned by the central bank – an association which has helped Sberbank in weathering crises. But with the latest privatization announcement earlier this year – a 7 percent stake to be sold for roughly $5.5bn, the state stake will be reduced to 53 percent. International investors will be offered a chance to get in on the sale.

The government may even eventually decide to go below a controlling shareholding. Gref says that going down to 50 per cent plus one share would present little problem, but going over that threshold should only be done “after lots of discussion.”

Aside from the Kremlin’s instinctive to desire to retain control of such a powerful institution, the issue of trust will loom large in such a discussion. Private business ranks low in public esteem in Russia.

OK, so trust is high in state-controlled groups such as Gazprom and Transneft?  A private company couldn’t possibly do worse in terms of opacity and shoddy financial practices.