Bitter rivalry boosts Russia’s banking sector

Russia's two largest banks state owned Sberbank and VTB have together placed more than $US 8 billions worth of shares onto the market in 2007. Now both banks are unveiling expansion plans for the coming year.

At an opening ceremony of a new branch in Moscow on Friday, Sberbank’s new head German Gref said the bank has ambitious plans of expanding beyond Russia:

“We just concluded the purchase of our partner bank in Ukraine, and we’ll work out the strategy for growing our market share and the bank’s capitalization there. We are already present in Kazakhstan, and experience shows that out development strategy there proves successful,” Gref said.

VTB – Russia’s second largest bank behind Sberbank – was quick to say it too is opening foreign branches. VTB will soon gain presence in Europe, Africa and Asia. On Friday, it got a license to operate in China.

Some experts say Sberbank’s expansion to the CIS countries could prove more challenging:

It is however obvious that rivalry between the two state-owned giants affects the market positively. Had they been in collusion, private banks would have no chance for competing.