Sberbank Downplays U.S. Sanctions Risk as Shares Plunge 17%

(Bloomberg) -- Sberbank PJSC, Russia’s biggest company, sought to reassure investors after its worst day in almost a decade, saying the U.S.’s harshest steps yet to punish the Kremlin will have a limited impact on its assets.

The sanctions, leveled against three dozen businesses, tycoons and officials late Friday, caused Russian stocks to drop the most since President Vladimir Putin’s invasion of the Crimean peninsula in 2014. Sberbank wasn’t targeted in this round of sanctions.

The lender “has been clobbered not because it is the most vulnerable to U.S. sanctions but because it’s what everyone is long in and has the most profits in,” said Julian Rimmer, a London-based emerging-markets trader at Investec Bank Plc.

Among those named by the sanctions were Oleg Deripaska and his aluminum giant, United Co. Rusal. International trading houses were advised to “immediately withhold all payments” to the company, according to a copy of a letter sent by its head of marketing. Sberbank is among Rusal’s largest creditors.

Assessing Reaction

“The total risk of Sberbank in relation to companies included on the U.S. Treasury’s sanctions list of April 6, 2018, is less than 2.5 percent of assets,” Sberbank’s Chief Financial Officer Alexander Morozov said via text message. Sberbank’s total assets had climbed to 23.4 trillion rubles ($390 billion) by the end of March, according to its report prepared to Russian accounting standards.

Sberbank closed down 17 percent in Moscow, its biggest drop since the 2008 financial crisis. Shares in the bank, an investor darling despite being cut off from international debt markets in 2014, are still trading 37 percent higher than a year ago. The MOEX Russia Index fell 8.3 percent, while the ruble fell below 60 per dollar for the first time since November.

The Kremlin said it needs time to assess the impact of the sanctions and its potential retaliation, Putin’s spokesman Dmitry Peskov told reporters on a conference call Monday.

“Sberbank got hammered, unjustly in my view, as it is a proxy for Russia,” Luis Saenz, co-head of global equities at BCS Global Markets in London, said. “If this compliance selloff continues at today’s levels, it will be a buying opportunity.”

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