Corporate Communications

Russia’s VTB plots Asian expansion

27 March 2009

Euroweek Asia
27 March, 2009

VTB Capital, the investment banking arm of Russia’s VTB Group, is planning to build a capital markets tam in Singapore as it looks to develop links between Russian clients and Asian investors, according to its chief executive officer and regional head of Asia.

VTB is shifting the focus of its existing Singapore office towards investment banking, and plans to offer a full range of fixed income, equities, derivatives, banking and investment management products to Asian clients, Herbert Moos, the former Lehman Brothers banker charged with managing VTB’s international expansion told Euroweek on Friday.

“We are not trying to compete with the established Asian players,” said Moos, chief executive officer of VTB Capital’s fully licensed UK branch, speaking between investor meetings in Hong Kong. “We are very Russia-focused and we want to work on building exposure and understanding of Russia in Asia, where it is as yet very scare.”

Although VTB’s expansion is at an early stage – it is only 12 months since VTB announced its plans to set up an investment bank – Moos is planning to add capital markets distribution bankers to the Singapore office and hopes VTB’s counter-cyclical growth will help it attract high-profile names.

That strategy has enjoyed some success in Europe. Moos himself joined VTB in August after 14 years at Lehman Brothers, most recently as chief financial officer for Asia Pacific, while VTB has also hired well known bankers in Europe and Russia, including Yuri Soloviev, formerly of Lehman Brothers and Deutsche Bank, and Sergei Timokhovitch, who joined from Deutsche Bank in 2008 to run the commodities business.

Other capital markets bankers that have joined include George Niedringhaus, who left his job as head of emerging market syndicate at ABN Amro to join VTB in 2007.

“Investment banking in Russia has been dominated b foreign players, but they are disappearing with the financial crisis,” said Moos. “New trading paths are emerging between Russia and Asia, and there are a number of Russian companies that are looking to expand into Asia.”

VTB will initially focus on marketing Russian products to Asian clients, who began to build positions in Russian equities in the big IPOs two to three years ago.

“Asian investors came to Russia late in the bull cycle but they have stayed longer than many of the Western funds,” said Alexey Yakovitsky, chief executive of VTB Capital in Moscow. “They are fundamental buyers searching for real return, and we believe the secondary equity business will be the first to grow here.”

Many of VTB’s Russian corporate clients would be willing targets for Asian private equity investors, while there may also be demand for public listings when global equity markets recover.

“If you believe there is a structural shift away from the US, Hog Kong is the next destination for Russian listings,” said Yakovitsky, who also co-heads VTB’s equities business and is global head of research. “Russian listings accounted for two thirds of all UK IPOs in 2006-2007 and we will be very focused on Hong Kong when that market opens up.”

VTB Capital is a subsidiary of VTB Group, the former Vneshtorgbank, which is listed in Moscow with GDRs and traded in London. It is 77.5% owned by the Russian government and is the only Russian bank to operate a fully licensed unit in London. The Singapore branch, which VTB acquired along with the former Moscow Narodny Bank in 2005, is a subsidiary of the London business.

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