VTB Capital is planning to double its head count in Asia over the next twelve months, making a push to win more business three years after it first set up an office in the region. The firm’s new Asia chief executive, Damian Chunilal, talked to Euroweek Asia about his ambitions.
Chunilal, a former Bank of America Merrill Lynch banker, joined VTB Capital in January, and has been spending much of his time finding the right staff to help the firm build its presence in Asia. He is preparing to announce a series of senior hires over the next two months.
Chunilal most recently worked at his own investment company, Ocean Capital Management, before starting at VTB in January this year. But he is most known among market participants for his time at Bank of America Merrill Lynch, where he was head of investment banking for the Pacific Rim, which included Asia and Japan.
EUROWEEK: Several companies have tried to build lasting businesses in Asia; some have failed. What makes VTB Capital different?
CHUNILAL: I don't think we have seen the last of firms pulling back or exiting Asia, and it is a failure of core strategy that is driving these exits. Having a strategy that just emphasises growth and market share, or doing what everyone else is doing for the sake of it, does not work.
Most of those firms that have exited the region were trying to pursue 2007 business models. These will not work in Asia or anywhere in 2012. So we need to have a disciplined plan t3 develop specific businesses in Asia, staying away from those that are challenged or overcrowded, such as cash equities. This approach and the financial strength of the firm and its core businesses in Russia makes our capability of sustaining a strategy in Asia very different to others before us.
EUROWEEK: Can you sum up your business plan?
CHUNILAL: One of our core aims is to improve our capabilities of intermediating capital flows between Russia and Asia. Trading flows between China and Russia stand at around $El0bn and posted 42% year-on-year growth in 2011, which is a significant rise. We have not yet seen this replicated in financial market flows but we believe it is only a matter of time before those financial flows do increase and we want to be positioned in the best place to capture them by advising Russian companies on raising money in Asia and advising Asian investors on making suitable investments in Russia. That is the business we absolutely have to do and be part of. It is core to us.
Secondly, we are also planning to develop some specific local businesses in Asia to improve our footprint and become more relevant to Asian corporate and investor clients. We are starting a high yield and high grade credit business, as well as one in principal finance. These local businesses will include sales and trading, distribution of securities originated in Russia and the CIS and what we can originate and trade within the region. And ta support this we need to hire across risk, structuring, sourcing and distribution. We will also add some investment banking coverage but this will be focused on China and Indonesian natural resources companies. That sector is one of our core expertises.
Lastly, in our business plan we want to develop our bank platform over time in China and India. We have VTB bank branches in Shanghai and Delhi, which are in the process of upgrading their licenses and over time we will look to build onshore businesses using those platform and our expanding capabilities in Hong Kong and Singapore.
EUROWEEK: Can you be more specific about the company's hiring plans?
CHUNILAL: We have been spending a lot of time with people as we are trying to hire the best in class across various businesses. We will be announcing some significant hires over the next two months, and the headcount will double over the next 12 months.
Our specific areas of hiring are in high grade trading, high yield trading, principle finance, coverage bankers for China and Indonesia, natural resources bankers for the region and sourcing and distribution people for key countries across the region.
EUROWEEK: What will your key businesses in Asia be? What is your deal pipeline like?
CHUNILAL: In terms of capital markets, we will be very much fixed income orientated, with high yield and high grade bonds. Markets like ECM will take more time. We hope to see more Russian companies list in Asia, but market volatility is preventing it at the moment. We encourage it, we want to support and be a part of it but we cannot build a strategy around something that has not yet happened until we see the volumes. This distinguishes us from the others.
We have built a strong emerging market distribution business in Europe and the US so adding high yield and high grade capabilities in Asia will very much add to that and be supported by what we already have. It is an evolution of where we already are.
Principal finance, corporate advisory and cross-border M8-A will also be a big focus for us to begin with, but these will be private transactions. For example, we have started extensively marketing Russian agriculture co- investment opportunities in Asia. And over time as we build out the bank platform we will have transaction banking, foreign exchange, trade finance and rates.
EUROWEEK: What attracted you to working at VTB Capital?
CHUNILAL: I did not know what to expect as I haven't worked at a Russian company before but the quality of the people made a big impact on me when I moved over. The management team is absolute top quality with a global outlook and the firm has hired best-in-class professionals at all levels.
The bank has a really high quality core business in corporate and investment banking in Russia and the CIS and is top of the league tables. And last but not least, the firm has excellent prospects. It is well capitalised and has no legacy businesses exposing it to Eurozone debt or US mortgages, or any other non-performing businesses.
EUROWEEK: How does working at VTB Capital differ from banks you have worked at in the past?
CHUNILAL: In the past, I worked at a global bank that had a dominant business in the US and was in the process of globalising. We grew the Asian business rapidly.
VTB Capital is in a similar situation. It has a dominant business in Russia and the CIS, and is looking to support these core businesses by developing in some other regions. So in a sense it is very similar as an internationally-minded company looking to strengthen its core business and take opportunities overseas.