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VTB has completed the creation of its investment banking business and said it expects the division to become operational next month despite the turbulence in Russia’s stock markets, which last week resulted in the collapse of a Moscow-based broker.
Announcing a net profit for the first half of the year of $679m (?460m), VTB said it had “essentially completed” the building of its investment banking team and that it expected the business would become fully operational next month. The announcement comes against a gloomy backdrop for the Russian market, which suffered some of its worst falls on record last week, prompting the government, which is VTB’s majority shareholder, to step in to halt trading for three days after double-digit declines in equity valuations.
The collapse in stock prices led to the collapse of Moscow-based broker KIT Finance after a series of its clients were unable to make margin calls. This has been followed this week by the announcement that Russia’s largest independent investment bank, Renaissance Capital, was selling a 50% stake to billionaire businessman Mikhail Prokhorov as it moved to shore up its own balance sheet. VTB’s launch comes six months after the bank said it would spend $500m over the next three years on building an investment banking operation, with the bank taking scores of staff from Moscow-based rivals with multi-million dollar guarantees.
Yuri Soloviev, the deputy chairman of Deutsche Bank’s Russian business, was hired in March to lead the expansion and has since hired several senior former colleagues from his old employer including its head of Russian equity research, Alexei Yakovitsky, chief strategist, Ivan Ivanchenko and real estate and infrastructure projects head, Victor Makshantsev.
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