MOSCOW Oct 11 The investment-banking arm of VTB
, Russia's second-biggest bank, is looking to expand
its business in Europe and gain market share at home as
international banks retrench, says VTB Capital's chief
executive, Alexei Yakovitsky.
Western sanctions imposed against Russia over its role in
the Ukraine crisis has deterred foreigners from doing business
with Russian banks, including state-run VTB, which is limited in
raising funds abroad and whose executives with Western passports
can't help sanctions-affected entities.
But Russia's successful Eurobond placement this year and the
launch of a privatisation drive, helped by VTB Capital, has
given it cause to believe it can manage to retain its presence
and even expand in certain areas, including abroad, especially
where some European rivals have left.
Last year VTB Capital advised on a 335 million-euro ($375
million) acquisition by Turkey's Yildirim Group of Portuguese
ports operator Tertir and was also co-arranger of a 1
billion-euro Eurobond deal for Cyprus earlier this year.
"We now do (Russian-related and other) business that
traditionally has been handled by European banks. A selective
approach to Europe is absolutely right for us. This is a really
important source of growth for us in the future," Yakovitsky
told Reuters in an interview.
VTB Capital, which has its European headquarters in Vienna
and currently generates up to a quarter of its revenues from
operations outside Russia, aims to take advantage of the reduced
competition, as foreign banks struggling to make profits in the
low interest rate environment look to withdraw from some
Apart from deals in Europe, the bank is now also targeting
cross-border transactions such as mergers and acquisitions
involving Asian investors.
"VTB Capital is doing well on that front as the risk
appetite among Western banks has fallen to zero and their
headcount has dropped drastically.
"This process had begun during the 2007-2009 (financial)
crisis and, in fact, has continued in recent years," Yakovitsky
He also said that though the market for mergers and
acquisitions has shrunk in the last few years, there was still
some business to do in Russia, where the government has backed
import substitution, driving consolidation in the manufacturing
and agriculture sectors.
"This increases demand for our services," he said.
While many foreign banks are now gone or have reduced their
presence, foreign investors, primarily from China, are still
interested in the Russian M&A market, he said.
He also sees opportunities for VTB Capital to get involved
in Chinese-related transactions in Europe.
"We have several China-Europe cross-border deals in the
pipeline", Yakovitsky said.
VTB Capital is also counting on commodity markets as a
growth driver. The investment bank is planning to provide loans
to commodity market players, taking their products such as grain
or crude oil as collateral.
"Geographically-speaking, we have penetrated all the regions
and countries that we are interested in. Now we are reinforcing
the team selectively," Yakovitsky said of moves to recruit more
"It is the right time for that on the market. Many good
foreign experts are ready to go to Russia where the investment
business sees activity and deals," he said.
($1 = 0.8928 euros)
(Reporting by Kira Zavyalova and Katya Golubkova; Writing by
Andrey Ostroukh; Editing by Alexander Winning, Greg Mahlich)