OREANDA-NEWS. November 11, 2009. According to Vedomosti, Sberbank intends to raise salaries to its employees by 15% next year. The bank is also planning to increase the fixed part of employee compensation from 40% to 60%, reported the press-centre of OTKRITIE Financial Corporation.

View: We believe the news is neutral, as wages in Sberbank are below market levels, and earlier guidance indicated plans to bring them closer to market levels. That said, the key elements of the bank's cost cutting program are still in place. These are primarily focused on reorganizing business to reduce non-staff costs, which currently contribute 58% of total costs. We believe the bank's intention to go forward with salary increases is an indication that management sees its financial situation improving, and thus we treat the news neutrally.

Action: We reiterate a BUY recommendation for the stock, and a US3.3/share target price, with 37% upside.