Financial News
Jason Corcoran in Moscow
07 September 2009
VTB Capital, the Russian state-controlled investment bank, has hired a three-man mergers and acquisitions oil and gas team from Dresdner Kleinwort and two Morgan Stanley bankers in a worldwide recruitment drive.
The brokerage, which was launched in April last year, has lifted a hiring freeze that had led to a cut in personnel, costs and a halt on business expansion.
Yuri Soloviev, VTB Capital chief executive, said he had recruited an M&A energy advisory team from Dresdner in London, headed by Alex Metherell, along with Giles Coffey and Andrew Hollins. The bank has also hired a sales team from ING plus Morgan Stanley pair Alexei Mitrofanov, a financial institutions group banker, and Alexey Makhnyov, head of consumer and retail.
VTB Capital, which has recruited more than 500 personnel since launching last April, said it was also hiring financial controllers, traders, salespeople, commodities professionals, corporate finance professionals in M&A, and equity capital markets coverage bankers for roles in Moscow, London, Dubai and Singapore, where staffing had been cut to a third of previous levels.
Soloviev said the bank was likely to hire an initial team of a dozen bankers on Wall Street having ruled out buying a boutique investment bank stateside. VTB Capital has leveraged its parent’s balance sheet and government contacts to win business and has broken into the top three bookrunners for arranging eurobonds and rouble bonds in Russia and the Commonwealth of Independent States.
Saturday, 19 September 2009
Renaissance Investment founder raids firm for new venture
Wall Street Journal Europe
September 4, 2009
By Jason Corcoran
Of FINANCIAL NEWS
Andrei Movchan, the founder and former chief executive of Russian fund manager Renaissance Investment Management, has recruited 20 personnel from the firm he launched to help set up a new wealth management business.
The firm name, Third Rome, alludes to Movchan's previous roles at Renaissance and Troika Dialog and also to what he describes as Russia's third cycle following the 1998 default and last year's banking crisis.
In an interview with Financial News, Movchan said the firm had hired a total of 30 personnel and had already won $200 million in client assets from Renaissance.
He said: ???In the private client world, the conversion rate is usually 100% because people like to stick to advisers they trust. There will be hurdles but expect we will have a very high ratio of clients defecting to us from Renaissance over time."
Movchan had been sole head of RIM from its inception in 2003 to 2007, when Rod Barker was hired from London-based hedge fund RAB Capital to take up the role of co-chief executive alongside him.
Movchan quit in February this year after the disagreement with the founder of parent group Renaissance Capital Stephen Jennings over the strategic direction of RIM. Jennings had wanted RIM to become a diversified asset manager involved in retail, institutional and international funds while Movchan wanted to focus on the high net worth segment.
Third Rome will focus exclusively in discretionary asset management accounts for high net worth clients and will steer clear of mutual funds and pension fund management, which Movchan believes are negligible. Clients will require a minimum of $1 million to invest.
"We are going to focus on discretionary management accounts rather than setting up funds. Clients want liquidity rather than additional legal structures. We will set up funds at a later stage," Movchan added.
Danilo Lacmanovic and Alexander Granovski have both been hired as senior partners of new firm. Lacamanovic worked at Renaissance for almost five years and latterly as a director advising high net worth clients and corporates, while Granovski worked at Renaissance for third years on discretionary client programs for high net worth individuals.
Other arrivals from Renaissance include business development director Dmitry Zhuk and Max Yanpolsky, who has joined as chief operating officer and chief technical officer.
RIM, which focused primarily on high net worth client referrals from Renaissance Capital, had built up client assets to $6 billion by early 2008.
Those assets have since fallen due to client redemptions and a fall in equity valuations. It has assets of $3.6 billion as of January 16, 2009.
Renaissance declined to comment.
September 4, 2009
By Jason Corcoran
Of FINANCIAL NEWS
Andrei Movchan, the founder and former chief executive of Russian fund manager Renaissance Investment Management, has recruited 20 personnel from the firm he launched to help set up a new wealth management business.
The firm name, Third Rome, alludes to Movchan's previous roles at Renaissance and Troika Dialog and also to what he describes as Russia's third cycle following the 1998 default and last year's banking crisis.
In an interview with Financial News, Movchan said the firm had hired a total of 30 personnel and had already won $200 million in client assets from Renaissance.
He said: ???In the private client world, the conversion rate is usually 100% because people like to stick to advisers they trust. There will be hurdles but expect we will have a very high ratio of clients defecting to us from Renaissance over time."
Movchan had been sole head of RIM from its inception in 2003 to 2007, when Rod Barker was hired from London-based hedge fund RAB Capital to take up the role of co-chief executive alongside him.
Movchan quit in February this year after the disagreement with the founder of parent group Renaissance Capital Stephen Jennings over the strategic direction of RIM. Jennings had wanted RIM to become a diversified asset manager involved in retail, institutional and international funds while Movchan wanted to focus on the high net worth segment.
Third Rome will focus exclusively in discretionary asset management accounts for high net worth clients and will steer clear of mutual funds and pension fund management, which Movchan believes are negligible. Clients will require a minimum of $1 million to invest.
"We are going to focus on discretionary management accounts rather than setting up funds. Clients want liquidity rather than additional legal structures. We will set up funds at a later stage," Movchan added.
Danilo Lacmanovic and Alexander Granovski have both been hired as senior partners of new firm. Lacamanovic worked at Renaissance for almost five years and latterly as a director advising high net worth clients and corporates, while Granovski worked at Renaissance for third years on discretionary client programs for high net worth individuals.
Other arrivals from Renaissance include business development director Dmitry Zhuk and Max Yanpolsky, who has joined as chief operating officer and chief technical officer.
RIM, which focused primarily on high net worth client referrals from Renaissance Capital, had built up client assets to $6 billion by early 2008.
Those assets have since fallen due to client redemptions and a fall in equity valuations. It has assets of $3.6 billion as of January 16, 2009.
Renaissance declined to comment.
Pension funds start building with Brics
Financil News
Jason Corcoran
24 August 2009
UK consultants advise clients to invest up to 15% in emerging markets
Emerging markets have finally gone on the pension scheme radar as the stock market boom in China and India outpaces the recovery in the west. While developed world equities have advanced by 15% this year, markets in China, Russia and India have clocked up 44%, 52% and 61% respectively.
In the absence of economic growth, western markets are starting to acquire some of the dysfunctional characteristics of developing countries, as governments agonise over the future.
Figures from global fund tracker EPFR show dedicated emerging-market equity funds took in $1.6bn (€1.1bn) in the first week of August, bringing total year-to-date inflows to $36.1bn.
Investor demand for emerging market bonds means the cost of insuring against debt defaults has fallen below western governments for the first time. Russian default swap prices, for example, have fallen to 255 basis points, or 20 basis points less than those linked to California.
Investment consultants in the UK remain cautious but none the less they are advising pension fund clients to invest up to 15% of their portfolios in emerging markets through equity, debt, currency, swaps and other strategies.
Hewitt Associates recommends that schemes should invest a maximum of 10% in emerging markets. Consultant Tapan Datta said: “The general fear factor associated with emerging markets has diminished. Their debt and equities are now on a par with developed markets.” Mercer recommends a 10% to 15% exposure and advises schemes to tap into the skills of specialist managers rather than broadening the remit of global teams.
Deborah Clarke, a principal at Mercer, said there was evidence that money has been switched out of UK and US equities into global and emerging market mandates.
She said: “We are seeing global and emerging market mandates picking up this year after going very quiet in 2008. A number of global equity managers are broadening their mandates.”
The risk aversion of pension fund trustees has historically been a factor working against increased asset allocation to emerging countries. The repeated occurrence of financial crises in countries such as Argentina, Mexico and Russia heightened perception that emerging markets were excessively volatile.
In the past, schemes in the UK and the US have viewed emerging markets as deserving their own asset class. They were seen as a sub-component of global equities, within Morgan Stanley’s All Country World Index for equities or Citigroup’s World Government Bond Index for bonds.
The upheaval in developed markets over the past two years and the reduced contagion to emerging economies suggests a greater migration of capital from the West is under way.
Mark Humphreys, a member of Schroders’ Strategic Solution group, said: “Pension funds should look at emerging markets more closely. They represent 12% of the MSCI all countries index and we expect that to increase.”
Asset managers and investment banks have been positioning themselves to benefit as emerging markets recover more quickly from the global economic crisis.
A survey by Bank of America Merrill Lynch published last week showed a net 52% of fund managers wanted to be overweight developing economies.
UK-headquartered bank Standard Chartered has raised £1bn (€1.1bn) to allow the group to expand in Asian markets. Standard chief executive Peter Sands said the group believes Asian markets will benefit from a faster recovery than the west.
Fund manager Mark Mobius plans to double Templeton Asset Management emerging-market assets to $50bn within two years. China is the top Mobius pick. Other managers see the country as a catalyst to a global recovery.
Jerome Booth, head of research at Ashmore Investment, has caused waves with his recent suggestion that investors should increase their level of exposure to emerging markets to between 35% and 50% based on the share of global GDP.
Long-only managers and emerging market specialists said Booth’s allocation is excessive and would blow a hole in pension scheme risk budgets.
Bill O’Neill, a portfolio strategist at Merrill Lynch Global Wealth Management, said: “Fifty per cent is way beyond what funds should be putting in. We think 12% should be a starting point. The story is right but the key problem is that the opportunity was more compelling early in 2009 when emerging markets were seriously undervalued.”
Aviva Investors supports Booth’s views in terms of how he has highlighted the potential for emerging markets, relative to developed markets, to contribute more substantially towards portfolio outperformance.
It believes that as emerging markets are growing, developing and arguably maturing, investors need to take a more sophisticated approach to tapping main growth markets.
Instead of allocating on a country or regional basis, Aviva makes the argument for using different emerging market styles. Aviva recently reorganised its emerging markets team on this basis, and instead of having regional experts it has managers dedicated to emerging macro, emerging special situations, emerging small cap, and so on, with the aim of delivering greater alpha.
Baring Asset Management is cautious on developed markets. Percival Stanion, head of asset allocation at Baring, said pension schemes should be downsizing their structured weightings to developed markets.
He said: “The industry is seeing a big ramp-up in searches and appointments in the UK and the US for emerging markets mandates. We have about 25% of our portfolio invested in emerging markets, which would be considered aggressive elsewhere.”
Baring stresses that emerging market portfolio exposures should depend on client risk appetites. But it believes investors’ allocation to emerging markets should, on a long-term strategic basis, be about 20%.
In multi-asset portfolios, Baring can argue that you need an investment manager that can tactically manage this exposure to emerging markets as conditions dictate, rather than maintaining a certain level of exposure at all costs.
Jonathan Harrison, global head of research at UBA Capital, the investment arm of the United Bank for Africa, recommends pension funds commit 40% to emerging economies.
He said: “Developing markets are, almost by definition, growth leaders and therefore more attractive investment destinations than developed markets. The global crisis has not altered the fundamental thesis but has illustrated that it is not only developing markets that are prone to periodic economic earthquakes.”
Swiss private bank Lombard Odier Darier Hentsch said allocations stretching to 50% are neither realistic nor pragmatic. Curtis Butler, head of emerging market equities at Lombard, said many inflows were a reaction to the correction from last year’s slump.
He said: “We believe in gradually increasing exposure. Emerging markets have not yet achieved the stability on an annualised basis. We need to see another decade of stability. There are still those who see emerging markets as a fair-weather friend but they have not yet learned to have them as a permanent place in their portfolios.”
Jason Corcoran
24 August 2009
UK consultants advise clients to invest up to 15% in emerging markets
Emerging markets have finally gone on the pension scheme radar as the stock market boom in China and India outpaces the recovery in the west. While developed world equities have advanced by 15% this year, markets in China, Russia and India have clocked up 44%, 52% and 61% respectively.
In the absence of economic growth, western markets are starting to acquire some of the dysfunctional characteristics of developing countries, as governments agonise over the future.
Figures from global fund tracker EPFR show dedicated emerging-market equity funds took in $1.6bn (€1.1bn) in the first week of August, bringing total year-to-date inflows to $36.1bn.
Investor demand for emerging market bonds means the cost of insuring against debt defaults has fallen below western governments for the first time. Russian default swap prices, for example, have fallen to 255 basis points, or 20 basis points less than those linked to California.
Investment consultants in the UK remain cautious but none the less they are advising pension fund clients to invest up to 15% of their portfolios in emerging markets through equity, debt, currency, swaps and other strategies.
Hewitt Associates recommends that schemes should invest a maximum of 10% in emerging markets. Consultant Tapan Datta said: “The general fear factor associated with emerging markets has diminished. Their debt and equities are now on a par with developed markets.” Mercer recommends a 10% to 15% exposure and advises schemes to tap into the skills of specialist managers rather than broadening the remit of global teams.
Deborah Clarke, a principal at Mercer, said there was evidence that money has been switched out of UK and US equities into global and emerging market mandates.
She said: “We are seeing global and emerging market mandates picking up this year after going very quiet in 2008. A number of global equity managers are broadening their mandates.”
The risk aversion of pension fund trustees has historically been a factor working against increased asset allocation to emerging countries. The repeated occurrence of financial crises in countries such as Argentina, Mexico and Russia heightened perception that emerging markets were excessively volatile.
In the past, schemes in the UK and the US have viewed emerging markets as deserving their own asset class. They were seen as a sub-component of global equities, within Morgan Stanley’s All Country World Index for equities or Citigroup’s World Government Bond Index for bonds.
The upheaval in developed markets over the past two years and the reduced contagion to emerging economies suggests a greater migration of capital from the West is under way.
Mark Humphreys, a member of Schroders’ Strategic Solution group, said: “Pension funds should look at emerging markets more closely. They represent 12% of the MSCI all countries index and we expect that to increase.”
Asset managers and investment banks have been positioning themselves to benefit as emerging markets recover more quickly from the global economic crisis.
A survey by Bank of America Merrill Lynch published last week showed a net 52% of fund managers wanted to be overweight developing economies.
UK-headquartered bank Standard Chartered has raised £1bn (€1.1bn) to allow the group to expand in Asian markets. Standard chief executive Peter Sands said the group believes Asian markets will benefit from a faster recovery than the west.
Fund manager Mark Mobius plans to double Templeton Asset Management emerging-market assets to $50bn within two years. China is the top Mobius pick. Other managers see the country as a catalyst to a global recovery.
Jerome Booth, head of research at Ashmore Investment, has caused waves with his recent suggestion that investors should increase their level of exposure to emerging markets to between 35% and 50% based on the share of global GDP.
Long-only managers and emerging market specialists said Booth’s allocation is excessive and would blow a hole in pension scheme risk budgets.
Bill O’Neill, a portfolio strategist at Merrill Lynch Global Wealth Management, said: “Fifty per cent is way beyond what funds should be putting in. We think 12% should be a starting point. The story is right but the key problem is that the opportunity was more compelling early in 2009 when emerging markets were seriously undervalued.”
Aviva Investors supports Booth’s views in terms of how he has highlighted the potential for emerging markets, relative to developed markets, to contribute more substantially towards portfolio outperformance.
It believes that as emerging markets are growing, developing and arguably maturing, investors need to take a more sophisticated approach to tapping main growth markets.
Instead of allocating on a country or regional basis, Aviva makes the argument for using different emerging market styles. Aviva recently reorganised its emerging markets team on this basis, and instead of having regional experts it has managers dedicated to emerging macro, emerging special situations, emerging small cap, and so on, with the aim of delivering greater alpha.
Baring Asset Management is cautious on developed markets. Percival Stanion, head of asset allocation at Baring, said pension schemes should be downsizing their structured weightings to developed markets.
He said: “The industry is seeing a big ramp-up in searches and appointments in the UK and the US for emerging markets mandates. We have about 25% of our portfolio invested in emerging markets, which would be considered aggressive elsewhere.”
Baring stresses that emerging market portfolio exposures should depend on client risk appetites. But it believes investors’ allocation to emerging markets should, on a long-term strategic basis, be about 20%.
In multi-asset portfolios, Baring can argue that you need an investment manager that can tactically manage this exposure to emerging markets as conditions dictate, rather than maintaining a certain level of exposure at all costs.
Jonathan Harrison, global head of research at UBA Capital, the investment arm of the United Bank for Africa, recommends pension funds commit 40% to emerging economies.
He said: “Developing markets are, almost by definition, growth leaders and therefore more attractive investment destinations than developed markets. The global crisis has not altered the fundamental thesis but has illustrated that it is not only developing markets that are prone to periodic economic earthquakes.”
Swiss private bank Lombard Odier Darier Hentsch said allocations stretching to 50% are neither realistic nor pragmatic. Curtis Butler, head of emerging market equities at Lombard, said many inflows were a reaction to the correction from last year’s slump.
He said: “We believe in gradually increasing exposure. Emerging markets have not yet achieved the stability on an annualised basis. We need to see another decade of stability. There are still those who see emerging markets as a fair-weather friend but they have not yet learned to have them as a permanent place in their portfolios.”
Sunday, 23 August 2009
Deal-hungry RenCap wins mandate for Sistema issue
Financial News
Jason Corcoran in Moscow
18 August 2009
Russia’s Renaissance Capital has been appointed as lead manager and bookrunner for a 20bn rouble bond (€441m) by conglomerate Sistema, capping a string of deals worth over $2bn (€1.4bn) that the bank has worked on in the past few weeks.
The Sistema rouble bond is the biggest of the year and beats the recent 15bn rouble issue by Russia’s biggest lender Gazprom.
The seven-year bond, which will be issued via a Dutch auction on Tuesday, will be used to refinance foreign debt owed by Sistema.
The other deals won by Renaissance mark a new entry into new markets in Poland, Zambia, Sierra Leone, as well as the convertible bonds sector.
Renaissance was a co-lead manager on a follow-on $200m public offering by Polish vodka producer CEDC on July 20. The deal was four times over-subscribed and pricing was close to the market.
On July 29, RenCap priced a combined $300m equity and convertible bond issue for Zhaikmunai, a Kazakh oil and gas company. It was the first convertible bond structured and priced by Renaissance and the first convertible offering structured and led by a Russian bank.
Renaissance acted as sole bookrunner on a follow-on offering for AIM-listed African Minerals that raised $105.5m. The placing raised growth capital to finance the company’s drilling campaign at an iron ore project in Sierra Leone.
The transaction is the only second equity offering to have priced at a premium in EMEA this year.
Current deals include a $49m rights issue by Zambia Sugar which would become the bank’s third African capital markets transaction this year.
The sting of fixed income mandate wins follow tthe recruitment of Yury Gruzglin from Deutsche Bank last October to run the debt product group.
Renaissance, which was forced to pare back its staff by 40% following the banking crisis, has recently started hiring again and has raised salaries to pre-crisis levels.
Jason Corcoran in Moscow
18 August 2009
Russia’s Renaissance Capital has been appointed as lead manager and bookrunner for a 20bn rouble bond (€441m) by conglomerate Sistema, capping a string of deals worth over $2bn (€1.4bn) that the bank has worked on in the past few weeks.
The Sistema rouble bond is the biggest of the year and beats the recent 15bn rouble issue by Russia’s biggest lender Gazprom.
The seven-year bond, which will be issued via a Dutch auction on Tuesday, will be used to refinance foreign debt owed by Sistema.
The other deals won by Renaissance mark a new entry into new markets in Poland, Zambia, Sierra Leone, as well as the convertible bonds sector.
Renaissance was a co-lead manager on a follow-on $200m public offering by Polish vodka producer CEDC on July 20. The deal was four times over-subscribed and pricing was close to the market.
On July 29, RenCap priced a combined $300m equity and convertible bond issue for Zhaikmunai, a Kazakh oil and gas company. It was the first convertible bond structured and priced by Renaissance and the first convertible offering structured and led by a Russian bank.
Renaissance acted as sole bookrunner on a follow-on offering for AIM-listed African Minerals that raised $105.5m. The placing raised growth capital to finance the company’s drilling campaign at an iron ore project in Sierra Leone.
The transaction is the only second equity offering to have priced at a premium in EMEA this year.
Current deals include a $49m rights issue by Zambia Sugar which would become the bank’s third African capital markets transaction this year.
The sting of fixed income mandate wins follow tthe recruitment of Yury Gruzglin from Deutsche Bank last October to run the debt product group.
Renaissance, which was forced to pare back its staff by 40% following the banking crisis, has recently started hiring again and has raised salaries to pre-crisis levels.
Russian banking carousel spins once more
Financial News
Jason Corcoran
17 August 2009
Letter from Moscow
The great purge in Moscow’s banking sector is over. Pay and staff were cut to the bone, but wages are now back to near pre-crisis levels, with annual guarantees of $2m to $3m ensuring that the hiring carousel is back in action.
Russian markets have rallied a year after being pistol-whipped by the international credit crunch, and roiled by a five-day war in Georgia, a domestic banking crisis and a series of investor scandals.
Russia’s RTS and Micex stock exchanges have won back trading lost to the London Stock Exchange and have recovered from their 80% plunge in value.
The upheaval caused by the market’s meltdown resulted in the effective nationalisation of brokerage KIT Finance and mid-tier lenders Globex and Svyaz Bank. Renaissance Capital was forced to accept a $500m investment last September from billionaire Mikhail Prokhorov in return for the sale of a 50% holding while Troika Dialog sold a 30% stake to South Africa’s Standard Bank.
RenCap, once the standard-bearer for Russian investment banking, slashed its staff by about half, and Troika by 35%.
Western banks, which had built aggressively in Moscow since 2007, were also forced to retrench as equity and credit markets shrivelled.
RenCap is hiring for selective areas and has increased salaries in Moscow by 20% and in London by 10%, which returns most surviving staff’s pay to pre-crisis levels. Deutsche Bank, the largest foreign investment bank in Russia, said it had never cut wages and had raised them in some departments by 15% to 20% from July 1.
As dealmaking has returned in oil and gas and in pockets elsewhere, owners and country heads are starting to worry about hanging on to their best people. Credit Suisse has fought to retain its sales staff in Moscow after an attempted raid by Goldman Sachs.
The Swiss bank was forced to authorise $2m guarantees after Goldman tried to swoop, according to a source close to the matter.
Goldman, which has struggled to break into the top five in any of the Russian league tables, has been linked with a move for several of Moscow’s best-known rainmakers.
The rumour mill went into overdrive this month after Alfa Bank’s Edward Kaufman had lunch with Chris Barter, co-chief executive of Goldman Sachs in Russia. Kaufman insists the issue never came up and that he is happy to stay at Alfa, where he is taking charge of “a revenue opportunity” to merge the group’s investment bank and the corporate bank. He said its fixed-income and equities divisions had recorded their best two quarters and corporate finance deals were growing rapidly.
At the height of the war on talent in 2007, Kaufman gained notoriety after being hired from UBS for a reputed $15m over two years. Sources close to Alfa suggest Kaufman has in the past few weeks signed a new two-year contract that is more lucrative than the original package.
Goldman is not the only outsider looking to land a senior banker to break into Russian dealmaking. Merrill Lynch has hired a co-head for its global market team in Russia from MDM Bank and is rumoured to be close to be bringing a head trader on board.
Barclays Capital is understood to be whittling down a short list of top bankers to head its expanded business in Moscow.
Swiss bank UBS is close to naming senior hires for investment and private banking while state-controlled VTB Capital continues its build-out into equities following its startling progress this year in debt capital markets.
One leading headhunter said: “The merry-go-round of hiring is back on. It won’t be as dizzy as 2007, but we have more work than we can handle and we are having to partner with other firms.”
Jason Corcoran
17 August 2009
Letter from Moscow
The great purge in Moscow’s banking sector is over. Pay and staff were cut to the bone, but wages are now back to near pre-crisis levels, with annual guarantees of $2m to $3m ensuring that the hiring carousel is back in action.
Russian markets have rallied a year after being pistol-whipped by the international credit crunch, and roiled by a five-day war in Georgia, a domestic banking crisis and a series of investor scandals.
Russia’s RTS and Micex stock exchanges have won back trading lost to the London Stock Exchange and have recovered from their 80% plunge in value.
The upheaval caused by the market’s meltdown resulted in the effective nationalisation of brokerage KIT Finance and mid-tier lenders Globex and Svyaz Bank. Renaissance Capital was forced to accept a $500m investment last September from billionaire Mikhail Prokhorov in return for the sale of a 50% holding while Troika Dialog sold a 30% stake to South Africa’s Standard Bank.
RenCap, once the standard-bearer for Russian investment banking, slashed its staff by about half, and Troika by 35%.
Western banks, which had built aggressively in Moscow since 2007, were also forced to retrench as equity and credit markets shrivelled.
RenCap is hiring for selective areas and has increased salaries in Moscow by 20% and in London by 10%, which returns most surviving staff’s pay to pre-crisis levels. Deutsche Bank, the largest foreign investment bank in Russia, said it had never cut wages and had raised them in some departments by 15% to 20% from July 1.
As dealmaking has returned in oil and gas and in pockets elsewhere, owners and country heads are starting to worry about hanging on to their best people. Credit Suisse has fought to retain its sales staff in Moscow after an attempted raid by Goldman Sachs.
The Swiss bank was forced to authorise $2m guarantees after Goldman tried to swoop, according to a source close to the matter.
Goldman, which has struggled to break into the top five in any of the Russian league tables, has been linked with a move for several of Moscow’s best-known rainmakers.
The rumour mill went into overdrive this month after Alfa Bank’s Edward Kaufman had lunch with Chris Barter, co-chief executive of Goldman Sachs in Russia. Kaufman insists the issue never came up and that he is happy to stay at Alfa, where he is taking charge of “a revenue opportunity” to merge the group’s investment bank and the corporate bank. He said its fixed-income and equities divisions had recorded their best two quarters and corporate finance deals were growing rapidly.
At the height of the war on talent in 2007, Kaufman gained notoriety after being hired from UBS for a reputed $15m over two years. Sources close to Alfa suggest Kaufman has in the past few weeks signed a new two-year contract that is more lucrative than the original package.
Goldman is not the only outsider looking to land a senior banker to break into Russian dealmaking. Merrill Lynch has hired a co-head for its global market team in Russia from MDM Bank and is rumoured to be close to be bringing a head trader on board.
Barclays Capital is understood to be whittling down a short list of top bankers to head its expanded business in Moscow.
Swiss bank UBS is close to naming senior hires for investment and private banking while state-controlled VTB Capital continues its build-out into equities following its startling progress this year in debt capital markets.
One leading headhunter said: “The merry-go-round of hiring is back on. It won’t be as dizzy as 2007, but we have more work than we can handle and we are having to partner with other firms.”
Russia's Alfa to merge banking units
Financial News
Jason Corcoran in Moscow
10 August 2009
Russia’s Alfa Bank, is merging its investment banking and corporate banking businesses into one division in a move it believes is a "revenue opportunity".
The new unit will be aimed at increasing Alfa’s ability to sell products ranging from loans to advice on takeovers to its 40,000 plus corporate clients. The move mirrors a decision taken by Citigroup in the aftermath of last year’s financial crisis.
Ed Kaufman, co-head of corporate and investment banking at Alfa Bank, said: “It’s not a cost issue but a revenue opportunity. The client managers on the corporate banking side will be put together with the corporate finance team to offer the best products to our clients.”
Kaufman dismissed rumours among Russian bankers that the group was closing its investment bank and said it had just posted its best two quarters. “There were a lot of trading opportunities in fixed income where we invested heavily and booked the profits. We have also done well in equities and made more money from making educated bets.”
Kaufman and Vladimir Tatarchuk, head of corporate banking, will co-lead the combined division.
Alfa, which is controlled by the billionaire Mikhail Fridman, employs 135 in its investment bank and 600 in its corporate bank. The group has already downsized in many areas of corporate and investment banking over the last year. “We would look to see how markets develop if there needs to be reductions or additions in any specific areas but there are no layoffs due to the merger,” Kaufman said.
The bank insisted there would be no conflict of interest resulting from combining the two businesses.
Kaufman added: “We do not believe that corporate bank relationship managers will be able to sell M&A or corporate finance products but they are a key part of the coverage model and will be trained to understand the products and also to know when they need to bring in product specialist.”
The president of Alfa Bank, Pyotr Aven, has been one of the most bearish commentators on the prospects for bad loans in Russia’s banking sector. Aven has warned that the country's banks' non-performing loans could rise to 30% of assets, from an estimated 10% today.
Alfa hit headlines in March this year when it clashed with the oligarch Oleg Deripaska in a bid to protect itself against the possible default of a $1bn (€780m) loan. It comes as Deripaska faces a struggle to restructure his outstanding debt to other creditors.
Bloomberg reported on July 31 that Deripaska’s Basic Element unit is close to agreeing with Alfa on revising terms of $800m in debt.
Jason Corcoran in Moscow
10 August 2009
Russia’s Alfa Bank, is merging its investment banking and corporate banking businesses into one division in a move it believes is a "revenue opportunity".
The new unit will be aimed at increasing Alfa’s ability to sell products ranging from loans to advice on takeovers to its 40,000 plus corporate clients. The move mirrors a decision taken by Citigroup in the aftermath of last year’s financial crisis.
Ed Kaufman, co-head of corporate and investment banking at Alfa Bank, said: “It’s not a cost issue but a revenue opportunity. The client managers on the corporate banking side will be put together with the corporate finance team to offer the best products to our clients.”
Kaufman dismissed rumours among Russian bankers that the group was closing its investment bank and said it had just posted its best two quarters. “There were a lot of trading opportunities in fixed income where we invested heavily and booked the profits. We have also done well in equities and made more money from making educated bets.”
Kaufman and Vladimir Tatarchuk, head of corporate banking, will co-lead the combined division.
Alfa, which is controlled by the billionaire Mikhail Fridman, employs 135 in its investment bank and 600 in its corporate bank. The group has already downsized in many areas of corporate and investment banking over the last year. “We would look to see how markets develop if there needs to be reductions or additions in any specific areas but there are no layoffs due to the merger,” Kaufman said.
The bank insisted there would be no conflict of interest resulting from combining the two businesses.
Kaufman added: “We do not believe that corporate bank relationship managers will be able to sell M&A or corporate finance products but they are a key part of the coverage model and will be trained to understand the products and also to know when they need to bring in product specialist.”
The president of Alfa Bank, Pyotr Aven, has been one of the most bearish commentators on the prospects for bad loans in Russia’s banking sector. Aven has warned that the country's banks' non-performing loans could rise to 30% of assets, from an estimated 10% today.
Alfa hit headlines in March this year when it clashed with the oligarch Oleg Deripaska in a bid to protect itself against the possible default of a $1bn (€780m) loan. It comes as Deripaska faces a struggle to restructure his outstanding debt to other creditors.
Bloomberg reported on July 31 that Deripaska’s Basic Element unit is close to agreeing with Alfa on revising terms of $800m in debt.
Sunday, 9 August 2009
Russian banks back on the hunt for talent
Financial News
Jason Corcoran in Moscow
31 Jul 2009
VTB Capital and Troika Dialog have both boosted their equity sales and trading desks as recruiters report a summer uptick in hiring by Moscow-based investment banks.
State-controlled VTB has hired Vlad Markovskiy from UBS and Denis Gorvat from ING for its equity trading operation.
The bank, which launched just over a year ago, wants to build on its success in debt capital markets by building out an equity brokerage. VTB is ranked number two in the league table of arrangers of Eurobonds in the Russia and Commonwealth of Independent States debt capital markets for the first six months of 2009, according to data provider CBonds.
Separately, domestic peer Troika has hired Jim Bevan and Marcus Martin in London to replace a sales and trading team that quit for VTB in June. Both join from Nomura International in London.
The pair, will replace Will Lynch, Peter Walker and Richard Phillips who left to join VTB’s growing presence in London, one of its three global hubs.
VTB and Troika are the latest hires from banks in Moscow, where recruitment is beginning to pick up, according to headhunters.
Taras Rybak, a managing partner at headhunters Brain Source, said: “The hiring freeze at the bulge brackets and the Russian banks in Moscow ended several months ago. Most banks are looking to hire selectively now that the domestic recovery has spread from M&A and the equity markets to the debt capital markets.”
Bank of America Merrill Lynch last week recruited Sergey Babayan from Russian bank MDM as managing director and co-head of the bank’s global markets team in Moscow. Russian brokerages Aton Captial and Otrkritie have been also hiring.
The relaunched investment banking business of Aton has hired Ivan Nikolaev and Maxim Kabanov as a senior analyst and vice president of equity and fixed income sales, respectively. Both had previously been employed by Renaissance Capital.
Otrkrite has also tapped a former Rencap employee having hired George Zarya as senior sales executive for DMA (direct market access), which allows buy-side institutions to access liquidity venues without having to go through an execution desk. Zarya had been at Rencap for over three years working on international DMA sales until a month ago.
Jason Corcoran in Moscow
31 Jul 2009
VTB Capital and Troika Dialog have both boosted their equity sales and trading desks as recruiters report a summer uptick in hiring by Moscow-based investment banks.
State-controlled VTB has hired Vlad Markovskiy from UBS and Denis Gorvat from ING for its equity trading operation.
The bank, which launched just over a year ago, wants to build on its success in debt capital markets by building out an equity brokerage. VTB is ranked number two in the league table of arrangers of Eurobonds in the Russia and Commonwealth of Independent States debt capital markets for the first six months of 2009, according to data provider CBonds.
Separately, domestic peer Troika has hired Jim Bevan and Marcus Martin in London to replace a sales and trading team that quit for VTB in June. Both join from Nomura International in London.
The pair, will replace Will Lynch, Peter Walker and Richard Phillips who left to join VTB’s growing presence in London, one of its three global hubs.
VTB and Troika are the latest hires from banks in Moscow, where recruitment is beginning to pick up, according to headhunters.
Taras Rybak, a managing partner at headhunters Brain Source, said: “The hiring freeze at the bulge brackets and the Russian banks in Moscow ended several months ago. Most banks are looking to hire selectively now that the domestic recovery has spread from M&A and the equity markets to the debt capital markets.”
Bank of America Merrill Lynch last week recruited Sergey Babayan from Russian bank MDM as managing director and co-head of the bank’s global markets team in Moscow. Russian brokerages Aton Captial and Otrkritie have been also hiring.
The relaunched investment banking business of Aton has hired Ivan Nikolaev and Maxim Kabanov as a senior analyst and vice president of equity and fixed income sales, respectively. Both had previously been employed by Renaissance Capital.
Otrkrite has also tapped a former Rencap employee having hired George Zarya as senior sales executive for DMA (direct market access), which allows buy-side institutions to access liquidity venues without having to go through an execution desk. Zarya had been at Rencap for over three years working on international DMA sales until a month ago.
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