Sunday, 17 June 2007

JP Morgan takes 16-strong team from Russian rival

Financial News

Jason Corcoran in Moscow
15 June 2007

JP Morgan is understood to have hired a team of analysts, traders and institutional sales people from Russia's MDM Bank in the latest of a series of battles for investment banking talent in the country.

The US investment bank, which was frustrated in its efforts to buy Russia's Troika Dialog and Aton Capital, is believed to have signed contracts with about 16 staff from MDM earlier this week.

A source close to MDM, said: "It's a fait accompli, the team are leaving for JP."

Those joining JP Morgan in Moscow include Vladimir Bril, managing director and head of equity sales, trading and research at MDM, Alex Kantarovich, head of equity research department and Derek Pearlin, managing director and head of equity sales.

The recruits are mainly on research but several sales, trading and back office staff are also understood to be leaving.

MDM is a privately owned bank geared towards retail and investment banking that was set up in 1993.

Businessman Sergei Popov has a 90% stake in the bank after parting company with co-founder Andrei Melnichenko, with whom he jointly owned MDM until last December

The bank recently hired Oleg Vyugin, former director of Russia's Federal Financial Markets Service, as chairman after market speculation tipped him to join Goldman Sachs.

JP Morgan was among the first US banks to open in the Soviet Union when Chase Manhattan chairman David Rockefeller established an office at 1 Karl Marx Square in Moscow in 1973.

The firm's Russian investment banking operation has maintained relationships with state-run entities and large corporations in Russia . It acted as joint bookrunner last year on the $10.7bn flotation of Rosneft and was one of the two international placement agents for this year's $8.8bn listing by Sberbank.

Last year JP Morgan was ranked second in Russian M&A by Dealogic and also had a strong showing in Russian international bonds.

Despite this success, the bank has made little secret of its plans to buy a local brokerage and held talks about buying Troika last year.

Its Moscow team comprises 80 people supported by over 20 Russia-dedicated industry and product specialists in Moscow and London.

Most Western investment banks have operations in Russia , but some have been expanding and investing over the past year to capitalise on the country's natural resources boom and growing consumer sector.

A unit of Italian bank UniCredit last year acquired Russian broker Aton Capital Group's equity, fixed income and corporate finance divisions for $424m.

A Moscow-based banker said MDM was unlikely to be ranked among the top securities houses in Moscow, and added that the best houses were Renaissance Troika, Deutsche, UBS, Aton, Alfa, UralSib.

Another source added: "They have some really good analysts in the team but I bet JP Morgan is paying an inordinately high premium."

A London spokeswoman for JP Morgan declined to comment.

Igor Smolkin, head of investment banking at MDM, did not return calls or emails.


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