Sberbank to slow growth if required to hike dividends

SOCHI, Russia, Sept 27 (Reuters) - Sberbank (Other OTC: SBRCY - news) , Russia's largest bank by assets, will have to slow lending growth if the government orders state-controlled businesses to pay at least 35 percent of earnings in dividends, CEO German Gref said on Friday.

Sberbank accounts for around a third of overall lending in Russia, whose economy is expected to expand by 1.8 percent in 2013, the slowest since 2009. Loan rates charged by Sberbank are, some economists say, more important than the central bank's own policy rates in making the economic weather.

"The choice is the following - either we lose capital by paying out dividends in which case we wouldn't be able to fund Russian economic growth, or we will get different treatment,' Gref told a briefing.

Seeking to boost its budget, the Finance Ministry has proposed increasing the dividend payout ratio for state-controlled companies to 35 percent.

For 2012, Sberbank paid 17 percent of its net profit in dividends under international standards.

Capital (OTC BB: CGHC - news) is a liquidity cushion essential for banks to absorb possible losses. It could be increased by retaining profits, subordinated debt or by a new share offering.

Gref said that Sberbank, in which the central bank owns just over 50 percent, would be forced to use all three tools to bolster its capital if the dividend proposal were approved.