Following are excerpts from the transcript of a CNBC interview by Geoff Cutmore and Herman Gref, CEO of Sberbank.
GC: So my first question is really about this market volatility and the nervousness that there seems to be about oil, about China. Why do you think the markets, at the moment, are in this mood?
HG: I think that this year it was a very difficult start. You have said that the stories, it's the first one, the commodity market, and the first one, the oil price, and I think this volatility we can see until the end of this year. Now we spend a lot of time understanding what we can get this year with the oil prices, and our understanding is that this year will be a very difficult period of time, until the end of this year, the volatility, the oil price will be really high. The first half of this year, the oil price can be between 25 and 30, 35, maybe. The second half of the year it will be between 30 and 40, but it's too difficult to predict the oil prices. But I think this is the very big issue we have, with such big volatility. The second reason is the China situation. I'm more optimistic about China's economy. I think that China has a-,
GC: So China, you think, is an issue, as well?
HG: I think that China has some macro economical problems. If you speak about RMB, and the currency course, I this is a big change for China's central bank and for China's government, but I think that they can find the right solution, the market solution, for stabilising this problem, and I think in the first half of the year they can do it, and to the end of this year, I hope that the Chinese situation can be more stable. I'm more optimistic about the second half of the year, and I think that it will be a big change for the oil production countries, because the oil prices will be on the same level, more or less, but for the rest of the world it will be not such a bad period of time.
GC: Clearly the ruble, at 80 to the dollar will exert some pain on companies in Russia. Can I ask you, do you think that the central bank should be responding by lifting interest rates to attract people to buy the ruble?
HG: No, I think it would be a wrong move from the central bank side. I think the currency course is the natural stabiliser of the macro economical situation. If the central bank supports the ruble, it can make a lot of problems for the whole community. Now we have difficulties in the financial sector because there's a big pressure to keep adequacy in the banking sector and many other bad things, but for the real sector, for the whole economy, it's very good, because this is the normal stabilisation, and I think the current situation which we have with the central bank position is the right position.
GC: You have said before that this raises pressure on reserve ratios and will force banks to protect themselves by setting aside reserves for non-performing loans. Are you worried that this year, if, as you say, we get this very weak oil price and this weak ruble, that we're going to have a banking crisis in Russia?
HG: There's a big discussion in our country, is it crisis or difficulties in our economy, because nobody wants to use this word, crisis, and banking crisis is a very special thing. In my opinion, this is a banking crisis, we can speak about banking crisis in last year, and this year too, because we have a big pressure, the banks must reserve a lot of capital, and I think this year, until the end of this year, many banks will have problems with capitalisation, and it seems that we have a banking crisis, but I think that the situation will be under control, the central bank controlled the situation, they don't have problems with liquidity, but I think this year will be the second difficult year for the banks.
GC: You have-, I mean, it's very encouraging that you talk about reasonable liquidity to see the banking sector through the year. Let me ask you, though, at 80 to the dollar, why would anybody want to sell government stakes in either VTB or your bank, Sberbank? It would seem like a bargain if it were going to be sold at this level for the ruble?
HG: I think it's impossible to sell this type of big companies in one moment. I think we need around one year for preparing the whole process for privatisation, our shares, and I think that we can speak about privatisation maybe at the end of this year or the next year, not early. If you speak about privatisation, it's a good question. When is the right time for privatisation? Because if the situation is stable, nobody wants to privatise something, because the budget doesn't have some problems, and I think now it's the right time for privatisation, but we must wait for stabilisation of the market situation in Russia.
GC: Let's just talk specifically about Sberbank this year. What is going to be different about what you're doing at the bank? Any acquisitions? Or is this just a time, given some of the pressures, to hunker down and focus on fundamentals?
HG: Yes, you are 100% right, because it's not the time for purchasing for the bank something. We have worked very hard with ARCUS, and we have invested a lot of money in our technological platform because it's two very big challenges. The technological trend, the Fourth Industrial Revolution, and the cost reduction, and I think for us it will be the year of solving these two problems.
GC: Excellent, good, thank you so much.
HG: Thank you very much.