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Sberbank’s tech ambitions hit by clashes with



A $1.6bn tech joint venture between Russia’s giant state-owned bank Sberbank and, the owner of the country’s largest social network, has been plagued by management and cultural clashes that may lead to a “divorce”, according to several people familiar with the situation.

Sberbank and announced the JV last July, pledging to combine their ride-hailing, food apps and delivery services to create Russia’s “leading platform in mobility and food tech”.

The two partners recently invested a further Rbs12bn ($160m) into the JV, while also raised a further $600m it planned to spend on further acquisitions.

The JV, which includes the taxi app Citymobil and the restaurant ordering app Delivery Club, is a rival to Yandex’s platform in the race to capture Russia’s 95m active internet users.

Column chart of Sales share (%) showing Russia's food delivery market

The move came after a similar partnership between Sberbank and Yandex, Russia’s largest search engine, to create a “Russian Amazon” soured and saw Yandex buy out Sberbank’s stake.

But the problems between Sberbank and Yandex, which included arguments over who would be in charge when both sides had equal stakes, appear to be repeating themselves between Sberbank and, the people close to the situation said.

The companies have even discussed splitting up the JV, but talks on a possible “divorce” remain inconclusive as the sides have yet to decide how they would divide up the assets, the people said.

Sberbank played down any problems, saying the companies in the joint venture “are growing successfully and we are convinced they will become leaders via the equal participation of Sberbank and Group.”

Sergei Luchin, a spokesman for, said that and Sberbank were building “two independent ecosystems”, and “may compete in some areas” but that this would not stop them “from working together to grow our food-tech and transport assets on an equal basis.”

Sberbank is determined to transform itself into a big participant in Russia’s tech sector, with Herman Gref, its chief executive, saying it wanted to have an “ecosystem” offering consumers everything from streamed entertainment to online mortgages and video appointments with their doctors.

Yandex,, state bank VTB and the Sistema conglomerate, which co-owns mobile phone company MTS and the online retailer Ozon, all have similar ambitions.

The rush to capture Russia’s 95m active internet users has even caught the attention of President Vladimir Putin, who said last month that the country’s nascent tech platforms were “extremely important” because they would “give our economy a noticeable impulse, including by letting many small and medium enterprises expand channels for marketing their goods.”

Mr Gref, inspired by the success of China’s “superapps” such as WeChat and Alipay, plans to spend a further Rbs2.5bn ($33m) on a multiyear rebranding that dropped “bank” from most of its products and replaced its logo with a generic tick in a circle.

In September, he took part in an hour-long video presentation in which he rode in a taxi with a cartoon cat, executives awkwardly showed off the ecosystem’s functions to ageing Russian celebrities, and chief technology officer David Rafalovsky used Sber’s technology to stream a TikTok-style dance with dancer Keyko Lee.

The rebranding was widely mocked on social media, where users complained the new logo made Sberbank’s app indistinguishable from dozens of others.

Sberbank announced a week later that Viktor Shkipin, the fourth executive to lead the rebranding in three years, had “made the decision at this stage of his life journey to leave us for personal reasons”, only six months into his job.

Herman Gref took part in a video presentation, widely mocked on social media, in which he rode in a taxi with a cartoon cat

But Mr Gref’s ambitions have been limited by the central bank’s worries that ecosystems could create “digital financial monopolies” which use the user data from their tech acquisitions to boost their banking businesses.

At the joint venture with, meanwhile, there have been disagreements over whether Sberbank’s financial network or’s social network VK should form the basis of their platform, the people said.

Sberbank has chafed at demands from to make VK the backbone of their shared ecosystem, while is reluctant to use Sberbank’s payments platforms exclusively, preferring to keep its existing relationships.

The bank has also been dismayed at its lack of influence over after buying a 36 per cent stake in the company’s complex governance structure.

Mr Gref told reporters on Tuesday that Sberbank was “planning to expand [the ecosystem] into ecommerce,” which he said was “the main part of an issue we have yet to resolve.”

The joint venture does not include’s partnership with China’s AliExpress. Talks about buying a stake in Ozon, Russia’s second-largest ecommerce company, fell apart this year when its owners decided on an initial public offering in the US instead.

Mr Gref is now under pressure to justify his tech strategy after the Kremlin transferred its stake in Sberbank from the central bank to the finance ministry in February. Officials there have fought Mr Gref to raise the dividend to 50 per cent of profits, a requirement for all state companies that it only met in full this year.

Column chart of market share (%) showing Yandex dominates ride sharing in Moscow

Sberbank enjoys an enormous funding base thanks to the near-monopoly on retail deposits it inherited from the Soviet era. The bank holds almost half of all total deposits and is more than twice the size of VTB by assets.

Mr Gref, a former economy minister in Mr Putin’s cabinet, has won plaudits worldwide for boosting Sberbank’s profitability by transforming it from a corrupt Soviet-style dinosaur into a high-tech innovator.

Its profits grew 75 per cent year on year to Rbs271bn in the third quarter of 2020 — a 20 per cent increase on analysts’ consensus expectations.

But Sberbank’s spending on its tech ecosystem has yet to produce tangible returns. None of the companies owned by the JV with made a profit last year: Delivery Club lost Rbs6.5bn pre-tax, while Citymobil’s losses were Rbs7.4bn.

Both remain lossmaking despite doubling and tripling their revenues year on year respectively in the third quarter, Sberbank said. Sberbank also recently bought full control of digital media company Rambler, which lost nearly Rbs1.5bn last year.

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The bank says it has spent less than $2bn on creating the ecosystem including $1bn on the JV with and the acquisitions of Rambler and mapping app 2GIS, but the Ministry of Finance intends to take a tougher approach to Mr Gref’s spending on tech, according to two people familiar with their plans.

However, the ministry said it did “not plan to limit spending on investments in the technology sector”.

Finance minister Anton Siluanov, who became chairman of Sberbank’s board this year, said on Tuesday that “uniting banking and non-banking services will create a synergetic effect, and non-banking markets will become a new source of income”.

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Emerging Markets

Central banks seek out riskier assets for reserves in yield drought




Central bankers who manage foreign currency reserves have been turning to new — and riskier — investments to compensate for the global collapse in bond yields ushered in by the pandemic, according to a new survey.

The annual poll of 78 reserve managers with a combined $6.4tn of assets found that the reduction in yields has presented the greatest challenge to these investors over the past year. For many, it has driven a shift into new asset classes including corporate bonds, emerging market bonds and equities.

Reserve managers are typically among the world’s most risk-averse investors, but they enjoy huge clout thanks to the more than $12tn they manage, according to the most recent IMF figures. This cash, accumulated by central banks to keep their currencies steady or to protect them in times of crisis, is generally parked in safe assets such as short-term government debt.

However, the survey carried out by Central Banking Publications suggests the pressure of low returns is forcing some to take on greater risk to preserve their capital. Bond yields around the world plummeted to record lows last year as central banks slashed interest rates and launched huge debt-buying programmes to combat the fallout from the pandemic. Although yields have since rebounded, they remain very low by historical standards.

Just over half of respondents to the survey said they were considering investing in new asset classes, while 44 per cent said they might add new currencies to their holdings. According to the IMF, 59 per cent of the world’s $12.7tn of foreign exchange reserves is held in US dollars, with most of the rest in euros, yen or sterling.

The survey also found that 42 per cent were considering inflation-linked bonds and 23 per cent were looking at adding to their holdings of gold.

Another reserve manager from the Americas said they had increased holdings of Chinese bonds, inflation-linked bonds and gold, adding “we are always willing to look into opportunities to make our reserves more efficient in terms of risk/ return”.

Central banks, like many investors, have been struggling with falling bond yields for the past decade, resulting in a global “hunt for yield” that has buoyed riskier assets. Many of the safest bonds offer negative returns once inflation is taken into account, while in Japan and the eurozone negative nominal yields are also commonplace.

The survey highlights “the challenge of capital preservation faced by the large number of reserve managers who hold predominantly short duration portfolios in highly rated government securities”, said Bernard Altschuler, head of central bank coverage at HSBC.

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Israel conflict rattles rapprochement with Arab countries




When the United Arab Emirates shocked the Arab world by normalising relations with Israel it said the move would help ease the protracted Arab-Israeli conflict. But nine months later, the wealthy Gulf state finds itself in a difficult position as its newest ally bombards the impoverished Palestinian territory of Gaza.

Israeli war planes and artillery have been pounding Gaza while Hamas, the group that controls the territory, has fired rockets into Israel. On Sunday morning, death toll in Gaza stood at 181, including 83 women and children, local health officials said.

Ten people have died inside Israel, including two children, local medics have said.

While almost a third of Arab countries now have relations with Israel, this week’s bloodshed shows that diplomatic ties ushered in by last year’s so-called Abraham Accords have given them little leverage and done nothing to ease the root cause of the protracted crisis — the Jewish state’s conflict with the Palestinians.

“They [the UAE] are clearly in a very difficult position. On one hand, the UAE’s interests with Israel are long term and strategic, so ideally their relations should be resilient to shocks,” said Cinzia Bianco, a visiting fellow at the European Council on Foreign Relations. “At the same time, the UAE obviously claimed that the Abraham Accords would give them leverage to also support the Palestinians and rein in Israel’s aggressions against them.”

So far, Israel has rejected all international efforts pushing for a ceasefire. But Bianco said Abu Dhabi could still deploy diplomatic leverage to pressure the Jewish state to limit the scale of its retaliation. Such intervention, however, could jeopardise progress on joint projects of strategic value to the UAE, she added. 

Recent collaborations include plans for Emirati and Israeli defence manufacturers to develop a system to counter drones.

The normalisation of relations between Israel and the UAE under the Abraham Accords was quickly followed by similar moves from Bahrain, Sudan and Morocco, that marked a radical departure from the established Arab stance towards the Jewish state.

The Arab position before the accords was that they would recognise Israel only if there was a just settlement with the Palestinians that led to the creation of a viable Palestinian state. The transactional deals brokered by the Trump administration, which pursued an overtly pro-Israel stance, left the Palestinians feeling isolated and betrayed. Critics said Arab states had given up a bargaining tool and gained little in return, warning the moves would be exploited by more militant Palestinian factions.

Like other members of the Arab League, the UAE endorsed an appeal on Tuesday to the International Criminal Court to “investigate war crimes and crimes against humanity” committed by Israel against the Palestinians.

“The UAE stands with the rights of Palestinians, for the end of the Israeli occupation and with a two-state solution with an independent Palestinian state with East Jerusalem as its capital,” said Anwar Gargash, diplomatic adviser to the UAE president, this week. “This is a historic and principled position that does not budge.”

The UAE foreign ministry was last month quick to condemn Israeli plans to evict Palestinians from their homes on land claimed by Israeli settlers. And when clashes broke out between armed Israeli police and rock-throwing Palestinian youths, the UAE urged Israeli authorities to reduce tensions.

The UAE’s clear public stance has given cover for Emiratis and residents in the autocratic state to condemn Israeli actions and express support for the Palestinians, after any local anger at the earlier decision to normalise relations was suppressed at the time. Apart from a fringe of Emirati online activists who have sided with Israel, most social media reaction — even from some ministers — has been pro-Palestinian.

“Normalisation [of relations] is irreversible but it is very difficult to defend and even talk about in these circumstances,” said Abdulkhaleq Abdulla, a Dubai-based political science professor.

After the UAE signed its accord, there was speculation about whether Saudi Arabia, Israel’s main prize, would follow suit. Like Abu Dhabi, Riyadh has been covertly co-operating with Israel on intelligence and security matters as they share the goal of countering Iran.

But this week’s Israeli assault on Gaza makes that appear ever more remote. Saudi foreign minister Prince Faisal bin Farhan on Sunday said the kingdom “categorically rejects the Israeli violations against Palestinians”, while calling for an immediate ceasefire. 

In Morocco, which established relations with the Jewish state in October in return for US recognition of Moroccan sovereignty over the disputed territory of Western Sahara, the foreign ministry said it was watching events “with deep concern”.

In 2014, during the last major war between Israel and Hamas, thousands of protesters, including government ministers, took to the streets across Rabat, the capital. This time Moroccan police dispersed a small pro-Palestinian protest in the city this week. The newly formed Morocco-Israel Business Council was also reported to have postponed a virtual meeting aimed at encouraging Moroccan investment in Israel.

Public sentiment in the Arab world remained strongly pro-Palestinian, said HA Hellyer, senior associate fellow at the Carnegie Endowment for International Peace. “The absence of protests isn’t an absence of the desire to protest but an absence of permission to protest.”

Restrictions on freedom of speech across the region made it harder to gauge the extent of public anger, Hellyer said, but social media and the extensive coverage on mainstream television showed the “Palestinian question” was still close to Arabs’ hearts.

“Almost half of the messages I received on Thursday for the religious festival marking the end of Ramadan, show pictures of the Dome of the Rock in Jerusalem,” he added.

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Chilean voters prepare to elect country’s constitutional legislators




Chile will this weekend vote in the legislators who will draw up its new constitution, with the country’s centre-right government facing a battle to maintain its grip on power ahead of a presidential election in November.

Gubernatorial, mayoral and municipal polls that were postponed because of the pandemic will also take place on Saturday and Sunday, alongside the election to populate the constitutional assembly.

Chile has not been spared the coronavirus second wave that has hit Latin America despite it having the highest vaccination rates in the region. Confirmed infections reached their highest ever level last month, although numbers have since declined.

“Chile is doing several historic and unprecedented things at the same time . . . in the middle of the economic and health crisis brought on by Covid-19,” said Robert Funk, a political scientist.

The most important vote will select members of the constituent assembly charged with rewriting the constitution drawn up during the 1973-90 dictatorship of General Augusto Pinochet — which most Chileans regard as illegitimate.

Nearly four-fifths of voters opted in favour of reforming the constitution in a referendum in November.

“These elections will probably define Chile’s institutional course over the coming decades,” said Gloria de la Fuente of Chile’s transparency council. “The vote will have a profound effect on Chile’s political system and civil society . . . electing the authorities to bring the country’s agenda forward.”

Yet turnover is predicted to be lower than the referendum. Some 58 per cent of Chileans who took part in a recent Ipsos poll said they were less likely to vote due to the pandemic, while less than half knew they would be voting for four different positions.

Chile has in recent decades become one of Latin America’s wealthiest nations, even if the deep inequality that sparked widespread social unrest in 2019 is far from resolved.

The low approval ratings for President Sebastián Piñera since those demonstrations have been exacerbated by defeats for his government in Congress, notably over pensions reform.

While the leftwing coalition that dominated Chile for most of the past 30 years has disintegrated since Piñera returned to power in 2018, his unpopularity could allow the left and centre-left to secure the two-thirds majority in the constituent assembly required to pass each article of the new document.

“If the right gets more than 30 per cent [in the assembly], it will be a tremendous victory,” said Lucia Dammert, a sociologist at the University of Santiago.

Despite the relative success of its vaccine rollout, Chile has been hard hit by the coronavirus crisis. Last summer’s peak of a weekly average of 352 daily cases per million was surpassed last month, reaching 383. Cases have since fallen back to about 280 cases per million.

However, Piñera’s government has been able to offer more generous Covid-related subsidies than most other countries in the region.

A feature of this weekend’s polls has been the emergence of independent candidates, Dammert said. Yet although the traditional parties had been badly wounded by the political turmoil, it would be “an uphill battle” for the independents to gain recognition, she said.

There are also wild cards such as Pablo Maltes — husband of Pamela Jiles, a populist presidential hopeful — who is running for governor of the metropolitan region of the capital Santiago.

“If Maltes wins, then there’s definitely something going on with Jiles,” said Funk, as it would suggest she was a strong contender for the presidency.

Jiles, who has championed measures to withdraw funds from Chile’s vaunted private pension system, is one of a number of presidential hopefuls, with no single candidate on the right or left enjoying a clear lead.

Electoral reform under the previous leftwing government of Michelle Bachelet that increased proportional representation means Chileans will for the first time also elect regional governors in a country where power has traditionally resided firmly in Santiago. The elections will also renew nearly a third of local authorities.

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