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Russian banking: Stalemate on investment banks’ eastern front

Russian and western firms have shovelled millions into investment banks in Russia. Although their ranks are much diminished, they remain dug in: doggedly hopeful, despite little chance of a change in their prospects.

Renaissance Capital is in many ways representativeof the situation of many investment banks in Russia, including foreign firms. For most, it remains the quintessential Russian investment bank. But like other investment banks here (local and foreign) it has faced, and perhaps still faces, existential questions.

Six years ago, it stood in the middle of a booming primary equity market. In this business it was almost unrivalled by local banks, and a good distance ahead of all but one international bank, according to Dealogic rankings. New Zealand-born founder Stephen Jennings came to be known as the Kiwi oligarch.

Fast forward to the present day, and trading in Russian equities is dwindling. Foreign investors are losing patience with Russia’s governance and losing interest in its economy. The primary equity market is still at less than a third of 2007 levels, struggling in 2013 to beat an already disappointing 2012.

Although RenCap says a group debt restructuring is complete, the investment bank has had to lay off more than half its staff since 2012. That year, the group’s financial situation got so bad that Jennings had to sell his stake in RenCap to an oligarch of greater financial stature, Mikhail Prokhorov.

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