Wednesday, 18 June 2008

Russian banks caught in talent war

Financial News

Jason Corcoran in Moscow

16 June 2008

A dwindling stock of investment bankers and growing demand for talent is driving the latest hiring merry-go-round in Russia’s capital markets.

Competition between bulge brackets and domestic banks has been exacerbated by Russia’s VTB moving into investment banking. The state-controlled bank has hired 60 bankers from Deutsche Bank and the German institution has in turn responded by hiring analysts and bankers from US and European banking rivals in Moscow, including Citigroup, UniCredit, UBS and ING.

Dmitry Vinogradov, head of research, strategy and banking at Citigroup in Moscow, has moved to UBS and co-head of equity research Mikhail Selezenev and equity sales director Sergei Suverov have left to join Deutsche Bank.

This follows the departure in February of Citigroup’s former Russia country head Stuart Harley, who set up the bank’s Russian business in 2004 and is on a sabbatical. He was asked to relocate full-time to Moscow from London last year but declined.

Nick Harwood, head of equities for central and eastern Europe, the Middle East and Africa at Citigroup, said the bank had increased its Moscow staff despite a number of defections.

It has hired John Heisel as an equity sales trader, Elina Ribakova as an economist, oil analyst Ildar Khaziev and Konstantin Korotich as chief administrative officer of Russian equities.

A Citigroup spokesman said: “Russia remains our biggest equities business in Ceema which we will continue to invest in. Prospects for the remainder of the year look good with a strong equity capital markets pipeline in particular.”

Italian banking group UniCredit, which acquired Russian brokerage Aton 18 months ago, has hired an executive director from Goldman Sachs to co-head its investment banking business with Alexander Kandel. Amiran Kanchaveli previously worked at ABN AMRO alongside the Prime Minister of Georgia, Vladimir Gurgenidze.

UniCredit is shaking up its Moscow business following its acquisition of Aton. A senior source said half of the bankers from its debt and credit team would be let go and 20 middle and back-office staff would be cut.

Russia’s capital markets have been largely insulated from the global credit crunch. A total of 306 M&A deals worth $51.3bn have been conducted this year, according to data provider Thomson Reuters. That represented an increase on the same period last year when 301 deals worth $46bn were conducted.

M&A has filled the void left by ECM, where just seven deals worth $2.23bn occurred in the first half of this year compared to 20 deals worth $22bn last year.

In debt capital markets, there were 23 issues worth $11.4bn in the first six months compared to 49 issues worth $22.5bn last year.

Russian investment funds have also benefited from the turmoil in developed markets. Russian funds have this year reported inflows of $2.7bn.

UralSib chief strategist Chris Weafer said: “Along with the $1bn invested through December last year, the total amount invested in Russia since the start of the election cycle on December 2 is $3.7bn. That compares with only $300m taken into these funds through the first 11 months of last year.”

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