Russian bank Sberbank has announced that it is to start funding commodity finance transactions.
The bank, which is state-controlled, will offer the service through its Swiss subsidiary and hopes to become a major player on the European market. It has already launched its first transactions.
The initial focus will be on financing Russian commodities exports, but Sberbank’s global head of trade finance and correspondent banking Andrey Ivanov tells GTR that “we do not exclude co-mingling with international or pan-European expansion where we also hope to serve independent traders and non-Russian trade flows”.
The news comes the week after BNP Paribas became the first bank to sell a bundle of commodity trade finance transactions to investors in an attempt to deleverage while continuing to service clients.
Ivanov admits that the move has partly come in response to the pressures faced by western banks, which present Sberbank with certain opportunities. However, he says that it was not a “decisive influence”.
Instead, the main driver behind the decision has been the bank’s gradual enhancement of its international presence. He continues: “Our Swiss platform currently offers a good base for building CTF with proximity to the international offtakers. The expansion will be done using systematic internal and cautious external approaches.”
In terms of the kind of transactions supported, Sberbank expects to be active in oil products, petrochemicals, coal, agri, mineral fertilisers, ferrous and non-ferrous metals.
With regard to volumes, Ivanov says: “We plan to reach volumes of US$1bn to US$1.5bn for the CTF portfolio by the end of 2014 and to grow in geometric progression afterwards. We expect to be able to serve different trading companies of different tiers where tickets may vary. Larger facilities are expected to be sold in the energy sector. Initially, the average facility size for the average CTF customer will be between US$20mn and US$50mn. We also see the largest integrated international traders as our customers.”