Troika wants to increase its 100-strong investment-banking staff by 25 percent to 40 percent in the next year to 14 months, said Todd Berman, who was hired as co-head of investment banking from Bank of America Corp. (BAC) in September.
“Deal flow will pick up,” Berman said in an interview in the Russian capital yesterday. “On debt-capital markets, we are going to print deals every week. Equity deals may come back in the first or second quarter next year, and we are having a lot of dialogue on M&A with clients.”
Sberbank Chief Executive Officer German Gref, a former economy minister, is seeking to turn the Soviet Union’s savings bank into a full-service financial firm that can compete at home and abroad on everything from bond underwriting to stock trading. VTB Capital, created from scratch three years ago by VTB Group, and closely held Renaissance Capital have opened offices and hired staff this year in New York, London, Hong Kong, Frankfurt, Singapore, Dubai, Mumbai and Kiev.
Troika’s investment-banking staff of 100 includes 30 to 35 Sberbank transfers who will report to Berman and his co-head, Igor Sagiryan.
Sberbank agreed in March to pay at least $1 billion for the 64 percent of Troika held by Chairman and CEO Ruben Vardanian and his partners and the 36 percent held by South African Standard Bank Group Ltd.
Troika has recruited a number of senior bankers since the accord was announced, including Standard Bank’s Rob Leith this month as global head of investment banking and markets and Chris Weafer as chief strategist from ING Groep NV in August.
Berman said he plans to hire “two to three director-level bankers” for mergers and acquisitions by the end of the year.
The staff changes haven’t been all one way. Jacques Der Megreditchian stepped down as deputy CEO and head of global markets in September. That followed the June departure of Nick Harwood as deputy head of global markets and head of sales in June. Der Megreditchian had advocated for a management buyout instead of the sale to Sberbank.
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The Troika acquisition will push the combined company past VTB and Gazprombank to the top position in underwriting ruble debt, according to data compiled by Bloomberg. Sberbank and Troika combined are No. 9 this year in organizing share offerings.
Merger and acquisitions advisory in Russia is dominated by western banks led by HSBC Holdings Plc (HSBA), Morgan Stanley and Societe Generale SA, data compiled by Bloomberg show. Sberbank is 32nd this year, though its biggest competitor overall is VTB, which has been the leading organizer of Russian debt and equity sales for the past two years.
“We are significantly larger than VTB and there are places where we will compete with them and places where we will complement one another and work together,” Berman said. Sberbank, which holds about half of Russian bank deposits, has a market value of about $57 billion versus $21 billion for VTB.
Sberbank has a client base of 78 percent of Russia’s largest companies and 60 percent of its mid-sized companies that can be tapped, Sberbank Deputy CEO Andrey Donskikh said in May. “Sberbank has colossal capabilities for financing investment- banking deals,” he said in a May issue of Troika’s in-house magazine. “With Sberbank’s participation, Troika’s opportunities are significantly multiplied.”
VTB Capital said in October it planned to increase its workforce overseas by 25 percent and open offices in countries including Turkey and Bulgaria over the next year to 18 months.
Sberbank agreed on July 14 to buy a network of nine small banks in countries including the Czech Republic, Slovakia, Hungary and most of former Yugoslavia from Austria’s Oesterreichische Volksbanken AG. Gref said then the acquisition was the first step in making Sberbank a “global bank.”
The lender said today third-quarter profit jumped 74 percent, surpassing analysts’ estimates, as it increased lending and released reserves set aside to cover bad loans. Its shares surged 3.3 percent to 85.30 rubles at 4:54 p.m. in Moscow.
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