Sberbank Out $1.2Bln in Suspected Fraud at Moscow Branches

About 20 percent of loans given out by Sberbank in Moscow are overdue, primarily because of fraud at three branches where former managers gave out more than 35 billion rubles ($1.2 billion) in loans to criminals.

At the end of 2009, Sberbank's consumer credit portfolio in Moscow was 74.8 billion rubles not including 19.5 billion rubles in overdue loans, which the bank counts separately, Maxim Poletayev, Sberbank president for Moscow, said Wednesday.

The lender's corporate loan portfolio also suffered, he said. In addition to its 164 billion rubles in loans, the bank gave out 30.6 billion rubles in long-overdue loans to questionable companies.

The majority of the overdue loans were approved several years ago by three branches, which had overdue rates of 80 percent for their consumer loans and 65 percent for their corporate loans, Poletayev said.

From 2005 to 2007, the number and volume of loans sought using fake documents and approved by Sberbank grew steadily, Oleg Chistyakov, the bank's deputy director for internal controls and audits, said in February 2008. In certain branches, more than half of the consumer credit portfolio was compromised, while the most blatant violations were uncovered in Moscow's Lyublinskoye and Stromynskoye branches.

Poletayev said that of the 19.5 billion rubles in overdue loans to individuals, 15.5 billion rubles were from loans to criminals approved in the Stromynskoye, Lyublinskoye and Meshchanskoye branches. Of the 30.6 billion rubles in now-overdue loans, those three offices granted 19.9 billion rubles to questionable companies, he said.

Questionable loans comprise 17.3 percent of the Moscow bank's overall portfolio. Without those loans, the lender's overdue rate would be lower than average for Sberbank, Poletayev said.

In December, 4.5 percent of Sberbank's loans were overdue.

He attributed the past violations, in part, to the weak oversight of Moscow branches. They were allowed to make decisions on large loans independently and their only internal security department was at the regional level, which oversees much of the Central Administrative District.

After an internal investigation, Sberbank filed several complaints to law enforcement agencies. A criminal investigation has been opened against one organized crime group, which included managers from one Sberbank branch, its staff and the bank's security department.

Spokespeople for the Interior Ministry's economic crimes department and Sberbank declined comment until the investigation is completed.

See also:

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