INTERVIEW: “The weekend’s protests were the Russian peoples’, not the opposition’s” – Maxim Reznik
Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
Russia's NorNickel adopts blockchain for supply chain management
Russia goes ahead with eSIM technology
Russia's retailer X5 Group posts 13% sales growth in 4Q20
National Bank of Ukraine retains a key policy rate at 6%, the outlook of the CPI deteriorates
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
LONG READ: The oligarch problem
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Polish industrial production continues boom in December
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Pandemic pushes public debt close to 80% of GDP in Albania and Montenegro
BALKAN BLOG: Superstition and resentment surround vaccination plans
Albania needs reforms for e-commerce to thrive, says World Bank
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Kosovo’s biggest opposition party risks being unable to run in general election
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegro’s special prosecution probes finance minister over €750mn Eurobond issue
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Slovenia’s economic sentiment indicator up 2.2 pp m/m in January
Slovenia lost €10bn by neglecting wood industry for decades
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
OUTLOOK 2021 Azerbaijan
OUTLOOK 2021 Georgia
Iran’s President Khamenei menaces private citizen Trump
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia, island of democracy
OUTLOOK 2021 Mongolia
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
Goldman Sachs, Citigroup, Morgan Stanley and Credit Suisse are among Western investment banks in Moscow losing out as fees from deal-making jumped to their highest level in three years.
Banking fees surged 46% to $357mn last year from $245mn in 2015, according to data supplied to bne IntelliNews by Freeman & Co., a New York-based consulting firm. That’s more than the $338mn the banks earned in 2014 when sanctions were imposed against Russia, but still well below the $819mn fee pot in 2013.
The rebound in Russia’s equity, bond and loan markets comes as commodity prices rallied amid signs that Russia is emerging from international isolation caused by sanctions over the Kremlin’s annexation of Crimea and its interference in the Ukrainian civil war. The investment banks benefitting the most are the state-controlled champions VTB Capital, Sberbank CIB, Gazprombank as well as China Development Bank.
However, Western pioneers of Russia’s capital markets like Goldman Sachs, Citi, Morgan Stanley and Credit Suisse and have been locked out of the fee bonanza. Data from Freeman shows that Credit Suisse, which first arrived in Moscow in 1976, didn’t earn a single buck from investment banking last year. Goldman Sachs, Citigroup and Morgan Stanley brought home negligible amounts as the three Wall Street titans dropped out of the top 20 rankings. Only JP Morgan and Switzerland’s UBS bucked the trend for Western lenders, with the former jumping to 5th spot from 10th and the latter surging to 6th from 48th a year earlier.
“The major global bulge-bracket banks have been largely replaced by local, Asian and smaller European banks,” Jeffrey Nassof, a vice-president at Freeman, tells bne IntelliNews.
The realignment in Russia’s capital markets comes after Western lenders cut credit lines to Russian corporates, slashed headcounts, and moved bankers and lenders from Moscow to London in the wake of the shock annexation of Crimea in March 2014. In the meantime, President Vladimir Putin’s administration turned to its own banks for funding and pivoted to Asia in a bid to replace traditional financing from the US and Western Europe.
British lenders Barclays and Royal Bank of Scotland have already cut and run. bne IntelliNews also reported exclusively last year that Jefferies had become the first Wall Street bank to shutter its Moscow business. Deutsche Bank, another Western titan, has also missed out on dealflow after a trading scandal forced it to close its Moscow operation and rely on its London hub to service Russian deals.
The big winners in 2016 were the Russian state-controlled lenders and a Chinese state-controlled bank. VTB Capital, headed by former Soviet diplomat Andrey Kostin, claimed top spot yet again with a 23% share of the fee pool worth $83mn. The big surprise was the arrival of China Development Bank in second spot after its fees surged 15-fold to $55mn due mainly to its participation in the financing of the mammoth liquefied natural gas project, Yamal LNG.
“The Yamal LNG project loans were by far the largest fee events of 2016, which went to local and Chinese banks,” says Nassof.
Sberbank CIB, whose parent is run by former economy minister Herman Gref, rose one position to third with a 10% share of fees worth $36mn. Gazprombank, which is allegedly run by former FSB agents, dropped back to fourth spot from second in 2014 with a 7% share worth $24mn.
Most of the roles in Russia’s rebooted privatisation programme were awarded to Russian banks, though Italian lender Intesa Sanpaolo was chosen in May for the sale of a stake in state oil producer Rosneft. Freeman says fee data from Rosneft’s deal would be included this year after the transaction closes in January.
Table by Freeman & Co.
Russian bond sales in foreign currencies and initial public offerings (IPOs) made a comeback last year after drying up in 2014 and 2015. Fees raised from equity capital placements more than doubled to $35mn, with the $500mn IPO of privately-held oil producer Russneft being the standout deal.
Revenues from foreign exchange bonds also made a remarkable rebound, rising 160% to $23mn from $9mn. Income from ruble bonds also rose to $13mn from $8mn.
Mergers and acquisitions was the one glaring black spot, particularly as consolidation of Russia’s once-bloated and corrupt banking sector came to a halt. Fees from domestic M&A deals retreated 32% to $46mn from $68mn in 2015, while revenues from cross-border deals declined to $28mn from $33mn.
The forecast for 2017 is for the recovery in Russia's capital markets to accelerate, especially as onerous US sanctions are expected to be eased by the incoming administration of Donald Trump. The economy is also expected to emerge from a two-year recession as oil, the country's main revenue earner, continues to rise.
Russia’s stock market has been recovering for the past year and is one of the hottest globally. The dollar-denominated RTS ended 2016 with a whopping 51% return, making it one of the five best performing markets in the world. The ruble-denominated Micex leapt 27%.
Most investment bankers think the market still has more room to run despite the 2016 rally as Russian stocks remain very undervalued in comparison to their emerging market peers.
Last year’s “catch-up” returns on the stock market are unlikely to be repeated in 2017, but most of the investment banks are predicting another 15-20% gain – possibly more if the Kremlin really can make peace with the White House.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: