Russian investment banking: special focus
Euromoney explores the changing face of Russian finance, with a new generation of firms competing with established players in a crowded investment-banking scene. Coverage includes macro risk, Sberbank's investment-banking dynamo, Renaissance Capital's great expectations, the consumer-banking boom and the commodities cycle.
CEO Andrey Kostin of the Russian state lender eyes investment banking cuts and a cap on its private-equity business, amid a more mature phase of growth in the heavily-competitive domestic market.
The CEO of VTB reveals the Russian government could see its stake in the lender diluted if it does not subscribe to a new round of capital-raising in the coming years, as he defends the bank’s state-backed business model and claims majority ownership is not necessary for sovereign support of the country’s second-largest bank by market cap.
The co-head of commercial and investment banking at the Russian state lender says aggressive growth continues after the departure of Todd Berman, head of investment banking.
The emerging markets-focused bank says 2013 operational profit is ‘a major achievement’, with 50% of revenues from Africa, boosting the lender’s diversification strategy after a volatile restructuring.
|Alexander Bazarov, Sberbank|
A new generation of firms are seeking market share from more established players in an already crowded investment-banking scene.
VTB builds paper trading, considers physical; Sberbank launches Zurich financing unit.
Tinkoff has sold a clever story of another kind of Russian bank.
|Alexander Merzlenko, RenCap|
Issuer ‘comes of age’; creates first euro benchmark.
During the past three years, Russian banks have plastered over holes in the corporate sector with record profits from retail. The choice now might be between fuelling a bubble or stagnation.
Qatar’s investment in VTB helps future deals between Russia and the Gulf, but relations will remain difficult.
Sberbank CEO German Gref says he has led Russia’s biggest bank through a thorough transformation. It has grown onto the international stage and bulked up in investment banking. What are his objectives, and how does he see its role at home and in the region?
Russia’s largely state-owned banking sector needs greater competition to help catalyze private sector investment as the economy enters a new era of permanently weaker growth and lower oil prices, say analysts.
Sberbank chief German Gref, who – as the former economics minister – was the boss of Central Bank of Russia governor-designate Elvira Nabiullina, says the bank’s dominance in the country’s economic affairs won’t exert undue influence over monetary policymaking.
Internationally marketed local-currency issuance has become the latest twist to a booming emerging market bond market. Russian and Turkish banks and corporates are playing a leading role, issuing new Euroclearable, foreign-law bonds in roubles and Turkish liras.
Buy now while stocks last! That seemed to be the sales pitch in a $3 billion debut Eurobond from Russian state-owned oil firm Rosneft late last year.
There are good strategic reasons for Sberbank to be concerned about the growth of such operations as Tinkoff and Home Credit: and good reason for a counter-attack.
Oleg Tinkov is at the forefront of the consumer-banking boom that is changing Russian finance. Tinkoff Credit Systems encapsulates all that is innovative – and risky – about the sector. This bank and others like it have everything the state banks lack. But in Russia that can mean trouble.
The Russian government’s desire to build an international financial centre in Moscow is genuine. However, the government’s market infrastructure reforms are also driven by other short-term and long-term motivations.
A central securities depository, liberalization of the local bond market, movement to T+2 settlement and a stock exchange merger – it’s all very welcome in Russia’s capital markets. But work remains to be done if its infrastructure is to catch up with its peers.
Struggling companies in central and eastern Europe can hope for new investment from VTB Capital this year, particularly via debt-for-equity restructurings.
Mikhail Prokhorov’s Onexim Group is taking control of Renaissance Capital, the billionaire’s holding firm announced in November. Although the investment bank will not change its name, the acquisition ushers in a new era for RenCap.
A wave of lower tier 2 issuance will not deal with Russian banks’ strained capital levels.
Euroclear Bank has been granted access to Russia’s central securities depository, opening the way for a substantial step-up in foreign participation in the country’s domestic bond market.
Russia’s biggest lender, Sberbank, sold $5.2 billion of stock in a secondary offering in Moscow and London in mid-September – its first international listing. The deal reduced the central bank’s stake in the bank to 51%.
Moscow’s financial community has been abuzz in recent weeks with news of Otkritie Financial Corporation’s proposed takeover of Nomos Bank. But the deal is not without its critics.
VTB’s $1 billion perpetual bond this summer – the first in Russia – was partly modelled on a similar issue by Banco do Brasil in January, says Herbert Moos, VTB’s CFO.