OREANDA-NEWS. December 14, 2009. Sberbank has agreed to purchase BSP-Bank, the 4th largest bank in Belorussia, for US 280.7m., reported the press-centre of OTKRITIE Financial Corporation.

View: The deal comes in the middle of the range between what was initially offered by Sberbank (US 150m) and the amount sought by the Belorussian side US 450m).

We consider the deal as a positive for Sberbank since it acquires a bank earning a 17.5% ROE (in 9M09) for 1.3x P/BV, which we think is quite attractive. Sberbank should continue to enjoy brand recognition and other advantages arising from its historical and geographical background in the country.

Moreover, this acquisition will help Sberbank support its clients' businesses in Belorussia. That being said, this is still a only a minor acquisition for Sberbank, as BSP-Bank’s assets account for just US 1.6bn, or less than a percentage point of those of Sberbank, and thus will have only a marginal impact on Sberbank's financials.  

Valuation and Action. While Sberbank currently trades on a P/BV of 1.9x and P/E 2010E of 15.0x, its 2011E P/E (1.4x) and P/BV (5.6x) multiples look quite attractive. We think our BUY rating, with a US 3.6/share target price, is well justified due to very strong margins and advantageous local market positioning.