Sberbank plans offering commodity transacion financing 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 the bank does not exclude expanding internationally to serve independent traders and non-Russian trade flows.

The news of Sberbank’s funding commodity transactions came one 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.

The main driver behind Sberbank’s decision has been the bank’s gradual enhancement of its international presence. The bank’s Swiss platform, located in close proximity to international offtakers, offers a good base for building commodity trade financing. According to the bank’s global head of trade finance and correspondent banking, 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, agricultural goods, mineral fertilizers, as well as ferrous and non-ferrous metals.

With regard to volumes, Sberbank plans reaching USD1 to 1.5 billion in its commodity trade financing portfolio by the end of 2014. The bank anticipates serving trading companies of different tiers. Larger facilities are expected to be sold in the energy sector. Initially, the average facility size will be between USD20 and 50 million. The bank expects that the largest integrated international traders will become its customers.

Profits from foreign operations

Separately, Sberbank expects that the contribution of its foreign assets to its aggregate net profit will exceed the target figure this year.

According to the bank’s president and CEO Herman Gref, in the first six months of the year, the bank earned RUR14.5 billion (over USD440 million) from international markets. Before the end of the year, the bank expects to receive about USD900 million in net profits from foreign markets. Mr. Greff noted that 2013 will be the first year for the bank to receive returns on its foreign investment.

Sberbank recently stepped up its presence on international markets, buying Volksbank International, an Eastern European subsidiary of Austria’s Oesterreichische Volksbanken-AG banking group, and Turkish Denizbank in a move to build a global financial corporation.

Sberbank earned a record RUR346.2 billion (USD10.5 billion) net profit last year and expects a net profit of at least RUR370 billion (USD11.3 billion) this year.