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28 Jun, 2010 07:40

Asian banks a role model on way to market

With Asia’s banking sector preparing to raise more than $30 billion dollars already next month, there’s much debate here in Russia about whether the banking sector should follow Asia's lead.

Agricultural Bank of China is the latest of China's four big lenders to list its shares, and it is going to be the world's biggest IPO, with Asia's major banks set to raise billions of dollars this summer.

Analysts say, the Russian banking sector is dominated by state-owned giants, crying out for privatization. And according to Richard Hainsworth, CEO at Rusrating, placing the shares in Asian market could secure a decent valuation.

“If VTB or Sberbank were to go the market and to put it onto Hong Kong or the Singapore market, they may get substantial interest there, because there is the money and there is the interest in Russia. If the Chinese get a very high rate on their IPO, it may cause the Russian banks to look at those markets and to use those valuations as a means to understand what is the potential for them there.”

Dozens of IPOs all over the world were postponed this year, including several in Russia.
But Hainsworth believes that Russia's top banks could benefit from going to the market now, even if it means they have to offer a slight discount.

“Sberbank needs to go to the market in order to expand. Sberbank has substantial opportunities in Ukraine, in Kazakhstan. There are no Russian banks in India and yet one of the biggest trading partners with Russia is India. The question for the banks’ management to decide is what is the balance between waiting for a better price – and the longer you go, the better the price will be – and not having the money to take advantage of the expansion opportunities.”

Only a handful of Russian banks out of more than a thousand are publicly owned and freely traded. The majority are controlled by a small number of shareholders, who for the time being see more value in holding onto their stakes, rather than raising capital.

But as the economy recovers and valuations rise, analysts believe their will a growing number of Russia banks coming to the market.