Credit Suisse moves Russia investment banking to London
By Megan Davies and Douglas Busvine | December 6, 2012 2:49 AM EST
The news on Wednesday marks a significant, but not complete, retreat from a market that Credit Suisse entered in the chaos that followed the breakup of the Soviet Union, and did not abandon despite the hit it took in Russia's 1998 financial crash.
The Zurich-based bank will move its debt and equity capital markets, and corporate advisory businesses to London, venue of major recent Russian share offerings by Sberbank
Credit Suisse was involved in both deals, propelling it to the top spot in the year to date in Russian equity deals, according to Thomson Reuters rankings. It placed 12th in debt deals and sixth overall in Russia.
Switzerland's dominant banks have come under massive regulatory pressure to cut risk and shrink balance sheets, while Russian state rivals Sberbank and VTB
The move responds to a flow of liquidity away from Moscow which - despite the Kremlin's efforts to transform the Russian capital into a global financial center - has failed to attract major deals.
Capital is leaving Russia at an annual rate of $80 billion, reflecting concern about corruption, the weak rule of law and the state-capitalist agenda pursued by President Vladimir Putin since his return to power in May.
Russia CEO Steven Hellman and Chairman Diana Gindin will stay on in Moscow to oversee trading in fixed income and equities, and private banking. They will continue to coordinate relationships with investment banking clients on the ground.
A "handful" of roles will be affected as some senior bankers relocate to London, the source added.
In a statement issued to Reuters, Credit Suisse said: "We continue to be proactive about monitoring the size of our business relative to client opportunities and market conditions.
"This involves realigning resources to growth areas and adjusting capacity to meet client needs and to manage costs across the business. Credit Suisse remains committed to its clients in Russia."
As part of a major efficiency drive, Credit Suisse expects to achieve cost reductions in its 2013 financial year of more than 3 billion Swiss francs ($3.24 billion), rising to 4 billion a year in 2014-15.
Credit Suisse was an early adviser on Russia's post-communist privatizations, but its investment banking arm, Credit Suisse First Boston, took losses of $1.3 billion when Russia defaulted on its domestic debts and devalued the rouble in 1998.
CSFB cut its Russia head count by a third after the crash, but the Swiss bank went on to expand its presence in the boom that followed Putin's rise to the presidency in 2000.
Foreign banks have found it increasingly difficult to compete against Russia's state banks, which enjoy a funding advantage and implicit guarantee from a sovereign that itself has a strong balance sheet.
Pioneer Stephen Jennings, who came to Moscow with Credit Suisse in 1992, recently sold out of the Russia-focused investment bank he later founded, Renaissance Capital, after saying that investment banking is one of the worst businesses to be in.
(Reporting by Megan Davies and Douglas Busvine; Editing by Mike Nesbit)
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- Kendall Jenner Could Be Next Victoria's Secret Angel [PHOTOS]
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- Taylor Swift Named People's Best Dressed Stars Of 2014 [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- Why Samsung Galaxy S5 Is Not The Best Smartphone To Purchase Now? If You Still Want To, Wait For A Month To Get It Cheap
- Apple iPad Air 2, iPad Mini 3 October Release Date Roundup: Freshly Leaked Protective Case Debuts Unique Vent Alongside Camera
- Google Nexus 6 Release Date on Q4 2014 Confirmed by T-Mobile Featuring Wi-Fi Calling
- Canadian IS Jihadist Wants to ‘Play Soccer’ with Heads of US Decapitated Soldiers
- Warning to U.S. – ISIS Has Shot Down a Syrian Regime Fighter Jet
- Spice Dream Uno vs Xiaomi Redmi 1S: Android One Smartphone to Challenge The Existing Budget Friendly Smartphone