Saturday, 29 November 2008

Russians lose confidence in faltering rouble

Financial News

By Jason Corcoran

24 November 2008

Letter from Moscow
Gambling in casinos has been a popular pastime in Moscow since the fall of communism but a more recent fad is desperate speculation on the currency markets. A slide in the value of the rouble and a deposit run at banks that is gathering momentum has loaded the dice in favour of a punt on the dollar.

The on-off love affair with the greenback dates back to 1998 when a rouble devaluation wiped out people’s savings. Those lucky enough to have withdrawn their money in time transferred funds into dollars.

Popular as Russia’s leaders are, its citizens have learnt not to take any chances by keeping faith with the rouble. Russians are rushing to protect their wealth in global currencies, having seen the stock market plunge by 70%, inflation hovering at 15% and all manner of businesses struggling to make basic payments.

Viewers tuning into national television on November 12 may well have been baffled by a
15-second clip announcing the Government’s widening of the rouble’s trading band by 30 kopeks, in a move seen by analysts as a tacit admission of a gradual devaluation.

Russia’s state-run channels have largely ignored the domestic economic crisis by focusing on Wall Street’s woes. President Dmitry Medvedev has gone as far as urging law enforcement agencies to prosecute anyone spreading malicious rumours that could cause the banks to collapse.

Worsening financial conditions, though, are beginning to eclipse an eight-year commodity boom as problems in financial services and real estate contaminate the real economy. Business professionals reading the financial press are better informed, while ordinary people check currency exchanges for the latest rates.

The state is determined to hold the currency stable and the central bank spent $57.5bn in the currency market to shore up the rouble in September and October. However, the rouble has lost 17% of its value over the past two and a half months despite the interventions. Last Thursday, street kiosks were selling dollars at more than 28 roubles apiece, compared with a low of 23 roubles in mid-July.

The faltering rouble is triggering a deposit run, with reports suggesting a deposit loss of 15% in large retail banks such as Alfa Bank, Austria’s Raiffeisen and Italy’s UniCredit.

Smaller banks are even more vulnerable. Authorities last week pledged to protect only national banks with over $4bn in retail deposits or regional institutions with more than $1bn in savers’ deposits.

While the Russian central bank’s move to increase the rouble’s trading band was intended to absorb some of the pressure on the currency, it had the effect of devaluing it by 1% and the stock market responded negatively. The fear is that if the central bank falters in its defence of the rouble, there could be a full-scale run on the banks and the currency.

The oil price is critical for the rouble. Economists believe the only way pressure for a full devaluation will ease is if the price of oil moves much higher than $60 per barrel.

Prime Minister Vladimir Putin and his presidential successor Medvedev remain popular while the Russian population remains apathetic to any alternatives. In an apparent appeal for calm, Medvedev and Putin said recently they would keep their savings in roubles – and in the bank. But further currency fluctuations, along with spiralling inflation and jobs losses may yet bring out protesting pensioners if their mattress money again proves to be good only for kindling fires on harsh winter days.

East Capital reveals staff cuts

Financial News

Jason Corcoran in Moscow
28 November 2008

Swedish fund manager East Capital has cut its personnel by a fifth following a 70% slide in its core equity market of Russia over the past two months.

The 40 jobs cuts from East Capital's overall headcount of 225 indicate how the financial crisis in Russia is spreading from investment banks to the buyside.

The Stockholm-based manager said 20 jobs in Sweden would be affected and the remainder in its international offices in Moscow and elsewhere in the CIS.

A statement from East Capital said: "Like many others in these turbulent times, we are carrying out an organisational review…We need to adapt to the new reality."

Hedge funds operating throughout Russia and the CIS are cutting their headcounts and slashing costs following sharp falls in equity prices and increases in clients redeeming their accounts.

Prosperity Capital, previously the leading Russian fund manager, has seen its assets under management shrink to $1.5bn (€1.1bn) from over $5bn over the past few months. It's $1.2bn Russia equity fund has fallen to $400m due to the drop in equity values.

Prosperity's chief executive Mattias Westmann told Financial News that Prosperity had posted some inflows from new clients and little in the way of redemptions.

He said: "We have not closed any funds but we are trying to cut costs in general. No personnel has been affected so far as we have always been a pretty low cost operation."

Prosperity, which was established in 1996, employs just 25 people in Moscow and London.

The closure last month of a Russian hedge fund run by Florin Investment Management has led to fears many more could go under as investors flee emerging markets.

The closure in October of Florin FSU Credit Opportunities Fund, which was invested in real estate and equity collateralised debt, led to 10 lay-offs at the firm in Moscow and London

Another Russian hedge fund, Denholm Hall Russian Arbitage Fund, announced it was considering a restructuring following difficulties. In a letter to investors, Denholm said it was conducting a review of "of the collateral of our loans, the liquidity of our borrowers, the health of the underlying businesses and our hedging strategy".

Meanwhile Da Vinci Capital, which conducted an initial public offering on London's junior Aim market in May, has launched a crisis opportunities fund.

Da Vinci's long-short hedge fund has suffered from redemptions and has fallen to just $15m and it's managers are considering winding it up.

Friday, 21 November 2008

Rouble trouble

The Guardian - Comment is Free

A slide in the value of Russian currency has led many to cash out their modest savings and punt for either dollar or euro

By Jason Corcoran, Wednesday November 19 2008 20.00

The financial crisis is quickly transforming Russia into a nation of desperate currency speculators due to a slide in the rouble's value and a deposit run gathering pace at the banks.

For many ordinary Russians, it's a game of roulette as they cash out their modest savings and punt for either dollar or euro.

The cards are stacked in favour of a dollar bet as Russians have a love affair with the greenback dating back to last financial crisis in 1998, when a rouble devaluation wiped out their savings.

Pensioners tuning into national TV last week may well have been baffled by a 15-second clip announcing the government widening the rouble's trading corridor by 30 kopecks, in a move seen by analysts as a tacit admission of a gradual devaluation.

Russia's state-run channels have largely ignored the domestic economic crisis by focusing on Wall Street's woes. Worsening financial conditions, though, are beginning to eclipse an eight-year commodity boom as problems in financial services and the real estate sector contaminate the real economy.

Business professionals who read the financial press will be well-informed while ordinary people are turning to currency kiosks and their chalkboards showing the latest currency rates.

The world's second-largest oil exporter has accumulated reserves of nearly $600bn during an oil and gas boom, but those reserves have fallen by a fifth to $475bn in the last three months largely due to efforts to prop up the rouble.

The Kremlin has spent tens of billions defending the rouble from falling oil and stock prices and capital flight of $150bn since early August.

The state is determined to hold the currency stable is because of the risk that a weak rouble will lead to a loss of confidence by Russian savers in the currency, in the banking system and in the government.

Over the past two-and-a-half months, the rouble has lost over 15% of its value, despite the interventions.

On Tuesday, street exchanges were selling dollars at less than 28 roubles, compared to a 23-rouble high in mid-July.

The faltering rouble is triggering a deposit run with reports suggesting a deposit loss of 25% in large retail banks and 3% in the state banks.

The Russian prime minister, Vladimir Putin, and his presidential successor Dmitry Medvedev remain popular leaders while the Russian population remains hugely apathetic to any liberal, communist or extremist alternatives.

In apparent appeal for calm, Medvedev and Putin said recently they would keep their savings in roubles — and in the bank. "I have kept all my accounts at the bank. I have not taken the money out, not changed roubles into dollars and not bought any shares," Medvedev told the Argumenty i Fakty newspaper.

But further currency fluctuations, along with jobs losses and rising inflation may yet bring out protesting babushkas if their mattress money again proves to be good only for fire tinder.

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Monday, 17 November 2008

Russian Banks Face Winter Freeze

Dow Jones International News

By Financial News reporters

17 November 2008

Just a year after they were engaged in a frantic war for the best talent, investment banks in Russia have started slashing hundreds of jobs and cutting pay.

Lay-offs at two of the country's largest domestic investment banks - Troika Dialog and Renaissance Capital - are approaching 1,000, and cuts will end up being substantially deeper than had previously been declared, according to bankers in Moscow.

Troika Dialog has begun cuts expected to total 500, or 35% of its overall staff, according to two bankers at the company. The bank was unavailable for comment. Renaissance Capital will cut 25% of its employees, according to an internal memo sent to staff, which represents about 375 of their overall staff of 1,500. However, bankers there said the figure will be higher.

A Rencap spokesman said nothing had been decided.

Elsewhere, there have also been 20 redundancies at mid-tier broker Trust Bank, according to a banker inside the company. VTB Bank is also cutting staff. Meanwhile, Ed Kaufmann, head of investment banking at Alfa-Bank, said the company was "trimming overall headcount" but is still hiring selectively.

Pay cuts are also in the pipeline. At Troika, those earning more than $3,000 (EUR2,357) a month have been told their pay will be slashed by 25%, according to one banker. Banking group Uralsib's staff have been told their salaries will be cut by 20%, while employees at broker Metropol earning more than $10,000 per month have been told their salaries will also be cut by 20%, according to staff at both companies.

Overseas banks that have piled into the market in the past year appear more resilient however. Merrill Lynch said it was not cutting staff in Moscow and UBS said it plans to increase staff.

Russia braced for a bleak winter

Financial News

Jason Corcoran in Moscow and Harry Wilson

17 Nov 2008

Moscow-based investment bankers are at the sharp end of job cuts

Russian index slumps

It seems like a different age, but it was only recently that Moscow-based investment bankers had firms fighting to secure their services and could command pay packages commensurate with demand.

Senior Moscow-based bankers and those covering the Russian markets asked for and got lucrative pay deals as local brokers and large international investment banks fought a hiring war to build their businesses in the country.

Guaranteed packages in excess of $10m (€7.8m) were not unheard of and even junior staff with experience of the Russian markets received $1m guarantees to join rivals.

In early 2007, Russian investment bank Alfa-Bank recruited the head of UBS’ Moscow office Ed Kaufman for a reputed $20m over two years.

Speaking to Financial News at the time of his hiring by Alfa, Kaufman described his package as “very generous”, while declining to comment on the specifics.

US investment banks including Lehman Brothers spent similar sums to secure top bankers from rivals to give them the entrance they desperately wanted into Russia’s booming natural resources-fuelled economy.

However, after two and a half months in which the Russian stock market has lost 70% of its value and with the oil price at a three-year low, the days of the multi-million dollar guaranteed package are history and the hiring boom has turned on its head as the axe begins to fall on bloated and expensive banking teams.

Last week, Russia’s largest independent investment bank, Troika Dialog, began culling 20% of its workforce with the loss of about 300 jobs. However, the cut could be more severe and as many as 500 jobs are potentially at risk, equal to 35% of its staff.

Troika’s redundancies followed similar cuts at main Moscow-based rival Renaissance Capital, which after accepting a $500m investment from Russian billionaire Mikhail Prokhorov was forced to make hundreds of employees redundant as it cut a quarter of its staff.

Renaissance Capital had become known within the international banking community for its lucrative pay packets, which included large grants of stock and generous guarantees.

In 2007, Renaissance Capital’s total staff compensation bill came to $370m, equating to an average payout of more than $300,000 for each of the firm’s 1,145 employees.

Until recently, Renaissance Capital was deluged with CVs from staff at investment banks looking to escape job cuts in their own firms and join the seemingly invulnerable Russian boom.

Weeks before it was forced to accept Prokhorov’s money, Renaissance Capital hired John Porter, Morgan Stanley’s head of Middle Eastern and African equity capital markets, to lead its growth in the region.

Speaking to Financial News in the wake of Prokhorov’s investment, Renaissance Capital’s co-head of investment banking Andrew Cornthwaite said: “We have always taken the view that if you are involved in these markets you have to accept that some things will go badly wrong from time to time. We are comfortable with that.”

The hiring freeze has hit institutions thought to be relatively immune, such as state-owned bank VTB, which had spent hundreds of millions of dollars in the past 18 months building its investment banking business.

In a statement, VTB said it had frozen recruitment and would focus on risk management, setting up a unit to cope with the fallout from the financial crisis.

However, for staff made redundant by Russian investment banks the terms are still generous. Troika employees who lose their jobs will receive between five and eight months’ salary, which in many cases will not be far off the length of time employees had worked for the firm.

International banks are starting to scale back the size of their Russian operations too, just over 10 years after many of the same banks shut up shop in Moscow in the wake of the Russian Government’s default.

A Russian investment banker said: “It is different to 1998. Then, the pull back was focused on Russia; this time it is part of global retrenchment by banks to what they consider their core businesses.”

Rivals say Goldman Sachs is scaling back its staff in Moscow, though a source at the bank said it was currently “assessing market conditions, while the jobs of former ABN Amro employees are likely to be vulnerable in the wake of RBS’ announcement last week that it would make 3,000 redundant in its global banking and markets business.

This is a change from 11 months ago, when bankers such as Merrill Lynch chairman and chief executive John Thain flew into Moscow amid fanfare in the local and international media to meet then President Putin and open the bank’s Moscow office.

One banker at a Russian bank said: “Everyone has been hiring like mad for the last couple of years, but the party is well and truly over now.”

Merrill Lynch insisted it is not cutting staff in Moscow despite widespread rumours it is preparing to dismiss staff and even close the office. One source close to the bank said it was preparing to expand the operation. Despite the sombre mood in the Russian market, fee levels are not far down on 2007 and are substantially up on previous years.

Russian investment banking revenues for the year so far stand at $1.53bn, according to investment banking data provider Dealogic, down 13% on the same point last year, but up more than 50% on the same point in 2006, when fees hit a then record of $1.14bn.

Steve Meehan, head of UBS in Russia, said: “The number of competitors in this market will be reduced dramatically. For the long term, this correction will be positive for banks like us.”

The long-term prognosis for Russia is positive and, despite the fall in oil prices, most admit this is only a temporary blip. One Russian banker said: “The long-term trend has got to be for higher energy prices and Russia will obviously benefit from this. What you’re seeing now is the bursting of a bubble, not the end of Russia.”

Meehan said: “Russia is the only country that has got a top-10 position in all the mineral resources that matter."

Russian power plays highlight risks for minority investors

Financial News

Jason Corcoran in Moscow
17 November 2008

Energy company has been hit by governance failings

The crash in Russian equities has exposed serious risks for minority shareholders, despite an amelioration in the country’s corporate governance over the past few years.

The growth of Russian capital markets and the recent boom in initial public offerings has led to an improvement in corporate governance and accounting practices among the blue chips, but violations continue in the small to medium tier. A number of Russian utility companies that were spun off from the electricity monopoly have been particularly affected.

A group of 15 minority shareholders in power generator TGK-4 last month wrote to President Dmitry Medvedev claiming Onexim Group, an investment firm owned by Russian billionaire Mikhail Prokhorov, had exerted pressure on Russian officials to act in Prokhorov’s interest after Onexim agreed to buy it in May.

By law, as a majority shareholder, Onexim was required to offer to buy out minority investors. Investors said Prokhorov promised to do so.

However, following the slide in the Russian stock market, the required offer price for the buyout of TGK-4 shares stood at a 50% premium to the utility’s market price.

The group of minority shareholders, headed by Swedish investment firm Prosperity Capital and including a number of Russian and international hedge funds, claims Prokhorov reneged on his promise.

In an open letter to the President, the investors accused Prokohorov of “trying to avoid obligations by manipulating facts and using legal loopholes.

The shareholders wrote: “We appeal to you with a request to take immediate measures to protect the foundations of the Russian financial market and legal system, and to help set right these flagrant violations of the principles of corporate management.”

Alexander Branis, a director at Prosperity, which has about $4bn in funds under management, said the Kremlin had not replied. The Kremlin did not return calls inviting comment for this article.

James Fenkner, founder of Moscow hedge fund Red Star Invest and a local authority on corporate governance, added: “TGK-4 has been made into a strategic asset. The situation is borderline criminal, but you can see that corporate governance always gets worse at the bottom of a cycle.”

Onexim said it was no longer obliged to buy out the minority shareholders despite initially promising to do so when they acquired the majority sake in May.

Since its purchase of the stake, it had managed, in a way Prosperity questions, to lower its stake in TGK-4 below 50%, eliminating its obligation to buy the remainder of the shares.

TGK-4 also recently landed on a list of state “natural” monopolies, which prevents those companies from being bought. Investors claimed Onexim had applied pressure on the anti-monopoly regulator to include it on the list.

Prokhorov says he has a big capital investment programme, which will benefit the company and its shareholders who lost out from the buyout.

In a statement, he said: “I am certain that, once TGK-4 carries out its investment programme, the investors will earn a lot more than they would by pulling out their money now.”

Prosperity has sold down its original 18% stake of TGK-4, but remains a substantial shareholder. Other large investors include RusHydro and Federal Grid Company, which were spun off from the electricity monopoly UES. Fund sources suggested the latter two might come to a separate arrangement with Prokhorov in relation to their stakes in TGK-4.

Igor Goncharov, analyst at UBS in Moscow, said the market weakness had highlighted problems at energy companies TGK-2, TGK-4 and OGK-3 and could led to potential risks at OGK-2, 6, TGK-6, 7 and 9.

He said: “The most apparent risk is that the core shareholders may economically dilute minority shareholders by buying newly issued shares at current valuations, which we find to be substantially below intrinsic fair value for most of the companies.”

Branis of Prosperity said Russia’s main financial regulator, Federal Financial Markets Service was beginning to talk robustly about minority shareholders rights and had stepped in at OGK 3 and TGK-4 in a practical way. The free float in these other utilities is rather small and Goncharov is concerned that abuses could occur.

He said: “The regulator has mobilised itself to get involved in upholding the rule of the law and this is very encouraging.”

Saturday, 15 November 2008

BNP Paribas Targets Russian Tie-Up

Financial News: Dow Jones International News

14 November 2008

By Jason Corcoran in Moscow

French bank BNP Paribas is understood to be in advanced talks about a partnership with one of Russia's top 20 banks, three months after the head of its securities business in Asia revealed it was exploring possible deals to strengthen its presence in developing economies.

Representatives from BNP Paribas have been conducting due diligence at the Moscow headquarters of Trust Bank for the past three weeks, according to three sources close to the Russian group.

A spokeswoman for Trust Bank denied talks were taking place. BNP Paribas declined to comment. Pierre Rousseau, chief executive of BNP Paribas' securities unit in Asia, announced plans in August to acquire a brokerage in the country and strengthen its foothold in the developing market.

Trust Bank three weeks ago received 7 billion rubles ($260 million) in emergency funding from the state banks.

It is also on approved list of banks that can tap the state development bank VEB, although the bank declines to say whether it has applied for additional funding.

Trust's main shareholders are Russia's Ilya Yurov, Nikolai Fetisov and Sergey Belyaev, who control about 80% of the holding group's shares. U.S. bank Merrill Lynch bought a 10% stake in the bank a year ago.

The holding company comprises of National Bank Trust, one of the leaders in retail banking with a presence in 200 cities across Russia, and Trust Investment Bank, a mid-tier broker.

BNP first arrived in Russia in 1974, but has made less impact than French rival Societe Generale (13080.FR), which boosted its stake in local bank Rosbank to more than 50% in February. It unsuccessfully bid for Russian Standard Bank, the country's leading consumer leader, in 2005. The French bank is rumored to have looked at buying Moscow brokerage Antanta Capital and Glitnir's Russian operation.

Monday, 10 November 2008

Russian hedge funds face threat of closure

Financial News

Jason Corcoran in Moscow
10 November 2008

The closure of a Russian hedge fund run by Florin Investment Management has led to fears many more could go under as investors flee emerging markets.

It is estimated about 70 hedge funds are operating in Russia and the Commonwealth of Independent States and analysts predict over half will be wiped out by next year.

The closure of Florin FSU Credit Opportunities Fund, which was invested in real estate and equity collateralised debt, led to 10 lay-offs at the firm in Moscow and London.

Florin’s principals Neil Smith and Aidan Freyne are hoping to buy the fund’s architecture from its shareholders at Trust Capital and relaunch the fund as a distressed assets vehicle.

Smith was previously head of alternative investments at the UK’s Morley Fund Management while Freyne spent 19 years with Salomon Brothers and subsequently Citigroup.

Smith said: “Credit has been a difficult space to be in but it’s going to be great for distressed and acquiring debt at super-distressed levels.”

Fears are growing that other Russia funds with their mainly long-only bias may be wiped out like they were following the 1998 financial crisis.

Florin was set up earlier this year with $100m (€78m) in seed money from Trust Bank and other external sources.

James Fenkner, founder of Moscow hedge fund Red Star Invest, said most Russia funds were equity focused with only minimal shorting so most had been hit by the slide in stock markets.

He said: “I haven’t seen anything like this since 1998. It’s a case of survival. It’s going to be a blow-up of the good, the bad and the ugly.”

Fenkner said Red Star’s Austrian backer Erste Bank was standing behind the fund, which had bucked the trend and returned over 100% during October.

Russian exchanges strive to modernise

Financial News

Jason Corcoran in Moscow

10 November 2008

A merger of Micex and RTS is more likely following the exodus of €108bn in foreign capital since August

Rybnikov: suspensions must stop

Moves to merge Moscow’s two stock exchanges, modernise market architecture and improve long-term liquidity have been given impetus following Russia’s worst trading collapse since the sovereign default in 1998.

The frequent closures of Moscow’s two main trading platforms have led many investors to switch to trading Russian Global Depositary Receipts and Russian American Depositary Receipts in London and New York.

Some 23 suspensions of trading on the rouble-denominated Micex since early September have contributed to a two-thirds slide in the volume of trading and an exodus of investors.
Micex chief executive Alexei Rybnikov hopes the suspensions will become a rarity once the financial regulator, the Federal Service for Financial Markets, introduces rule changes.

He said: “I hope this situation will not continue. We have told the regulator and the Government that closures should be rare and can only be invoked for systemic reasons and not when the exchanges are only falling.”

Micex and Moscow’s biggest investment firms have asked the regulator to return to the old trading rules and allow bigger fluctuations so that a suspension becomes an extraordinary measure.

Rybnikov said the trade volume in London had doubled on the days when operations had ceased on the Micex and RTS exchanges. The trading closures, designed to curb the magnitude of fluctuations, ranged from one hour to more than a day.

BNP Paribas has estimated that $140bn (€109bn) in capital has left Russia since the beginning of August amid war with Georgia, a decline in oil prices and the rout in the country’s stock market.

Problems with the domestic repo market exacerbated the equity sell-off in early October when banks and brokers failed to meet their obligations on time. If a repo deal is not completed on schedule, the lender may dump the stocks in the market.

Repo deals made up about two thirds of the trading volume at Micex while margin trades and short selling were estimated at up to 25%. During the crisis, the regulator at various times stopped trading in repo, margin trades and short selling.

Rybnikov said a number of institutions had been fined for defaulting on bilateral repo obligations while the banning of Utrade.Ru, a subsidiary of Uniastrum Bank, should serve as a warning to others.

Difficulties in settling its repo payments, worth about 7bn roubles (€202m), forced investment bank KIT Finance to sell up to state diamond miner Alrosa and rail monopoly Russian Railways for 100 roubles. Problems at Moscow’s leading brokerage Renaissance Capital led to its sale of a 50% stake to oligarch Mikhail Prokhorov at a knockdown price of $500m.

The debate over the reshaping of Russian financial architecture has brought the issue of a merger of Micex and RTS to the fore.

Rybnikov said: “It makes sense to unify the exchanges. Only certain issues can be resolved through consolidations. The discussion started a year ago and barely anyone is against it, but we need to know what the state thinks and whether it wants to be a regulator, an owner or an activist investor.”

Russia’s Central Bank is the main shareholder in Micex, the central company in the group with a 29.8% share. Leading brokers, who are shareholders and members of both exchanges, have been campaigning steadily for a union for several years.

Vladimir Milovidov, chairman of the FFMS, admitted to delegates at last month’s UBS investor forum in Moscow that new approaches to regulation need to be found.

He said: “It is very important to combat insider trading. Laws have been submitted to the State Duma and we are hopeful they will come before parliament in the new year. We also hope to have a draft law for bond holders and to protect their rights.”

Milovidov said negotiations to expand Russia’s circle of investors to encompass Chinese funds were advanced. “We could have double listings in Shanghai and Moscow and that would provide a stabilising role.”

Deepening Russia’s investor base, pension reform and accelerating mutual fund growth are high on the agenda.

“The Russian market probably fell more than other developing markets,” explained Rybnikov. “The reason for that is the general shortage of long-term domestic investors in Russia. About a million and a half people buy and sell securities from time to time. This is roughly one per cent of the population… It is next to nothing.”

Rybnikov applauded moves to allow funds accumulated in the pension system to be invested in stocks other than governmental securities and Government-guaranteed securities.

He said: “One more significant step is the decision to allow the central bank to become a trading member on the stock exchange which would ultimately, I hope, allow the central bank to accept a wider range of collateral to provide liquidity to not only the banking system but also to the financial system, including investment companies and brokers that are not licensed banking institutions. We have seen that, as a result of the crisis, decisions which have been delayed for years have started to be taken.”

However, Rybnikov warned that differences in two competing governmental blueprints for Moscow as an international financial centre would have to be resolved first.

He said: “The Ministry for Finance and the Federal Service for Financial Markets have their own plans. There are key differences to be resolved in ideas for architecture, taxation and the investor base.”