OREANDA-NEWS. October 14, 2010. Deputy Prime Minister Igor Shuvalov has said that the principal decision on privatization of c. 9% in Sberbank has been made, although the details will take months to be agreed upon, reported the press-centre of OTKRITIE Financial Corporation.

View: We believe this is expected by markets as Sberbank was discussed as a part of privatization plan for 2011-2013, and the sale of 9% (worth USD 5.85bn at the current market capitalization) implies CBR will remain a controlling shareholder. Shuvalov, however, did not rule out that CBR might eventually give up the control, but we think at this point this is unlikely. It is also not clear whether a strategic investor for the stake will be sought, or it will be sold into the open market - which is more likely, in our view. Should the scenario of an SPO materialize, there is some risk of overhang in the stock. However, if the sponsored GDR program that the bank has been looking to launch is tied with the SPO, the risk of overhang could be reduced to an extent.

Valuation and Action: We like Sberbank for its strong core business. The stock is trading at 2.2 P/BV 2010 and 1.8 P/BV 2011, we reiterate BUY at USD 4.10/share.