Russia's top bank Sberbank, which intends to develop its investment business, signed an agreement of intent on Friday to buy 100% of the country's leading investment house Troika Dialog for $1 billion, Sberbank head German Gref said.
"The price is not based on expected effect, but on real results, which we will get in the next three years. It is not expensive and not cheap, this is exactly what we will get," said Gref, adding that Troika was valued at $872 million.
Standard Bank, a stakeholder of 36.4% of Troika, said in a statement that on top of the $1 billion to be paid in cash, Sberbank will also pay a share of the merged company's future profits if they top an agreed level.
Gref said Sberbank expected Troika's profit to surge to $200 million in 2011-2013 from $42.3 million last year.
In the next three years, Sberbank will receive 50% of Troika's cash flow, and will fully integrate it from 2014.
He said the deal would have a positive effect on Sberbank's earnings per share next year, but will be neutral this year. It will have little impact on capital adequacy and the cost/income ratio.
Ruben Vardanyan, Troika Dialog Chairman and one of its founders, will lead the three year integration of Troika's business into Sberbank and will be appointed as CEO of the newly formed investment firm. Gref will become head of the supervisory board.
The deal is to be completed in the fourth quarter of 2011, Standard bank said.
Gref said that former CEO of Italy's UniCredit bank, Alessandro Profumo, who last year lost his position because of Libya's stake-building in his bank, advised on the deal.
"Alessandro Profumo... has been working with us all this time and provided us invaluable service," Gref said adding that 80% of merger deals fell through.
MOSCOW, March 11 (RIA Novosti)
