Russia’s VTB Plans Middle East Push as Others Withdraw

VTB Capital, the investment banking unit of Russia’s second-biggest lender, is expanding its equities division in Dubai as brokerages retreat from the region.

The bank started trading Middle East, Turkish and Polish shares in February and plans to expand its investment banking services in the Gulf Cooperation Council region, Makram Abboud, chief executive officer of the Middle East and Africa said in e- mailed responses to questions from Bloomberg yesterday. The company declined to say how many people it employs in Dubai.

“VTB Capital does not have the legacy issues that are impacting many other firms,” said Abboud, who was appointed in January. “We are able to grow our business at a time when many others are downsizing, reducing their capabilities and withdrawing from specific markets and businesses.”

VTB (VTBR) is expanding in Dubai as the emirate rebounds from its biggest financial crisis. Stock trading surged eightfold in the first quarter, the most among the world’s 40 biggest markets. In 2011, share prices and trading values fell to their lowest levels since 2004, leading 50 of the 98 local brokerages active in 2008 to suspend operations.

The benchmark Dubai Financial Market General Index (DFMGI) has risen 22 percent this year after losing 17 percent in 2011. The measure was trading 0.4 percent higher at 1655.01 at 12:16 p.m. in Dubai.

Brokerage Suspensions

Banks including Credit Suisse Group AG (CSGN) and Nomura Holdings Inc. (8604) have trimmed their equities or equity research divisions after trading on the Dubai Financial Market plunged to a six- year low in 2010. Al Futtaim HC Securities LLC, a Dubai-based broker ranked first by value traded in July according to the Dubai Financial Market website, said on Jan. 4 it would stop operating in the U.A.E.

“We are creating a global investment business so what we are trying to build in Dubai is very close to what the other large international investment banks have established in this region,” Abboud said. “Trade and financial flows between Russia, Central and Eastern Europe, Middle East, Africa and Asia will increase and VTB Capital is uniquely positioned to participate in these flows and support our clients.”

VTB Capital plans to provide advisory, mergers and acquisitions, equity and fixed-income trading, structured lending and asset management services throughout the Middle East and Africa, Abboud said.

“We are seeing a market that is relatively positive at the moment,” he said. “We will probably see this tendency for a little longer, but the fundamental issues of the euro zone crisis and Arab Spring are far from being resolved and the volatility is bound to come back.”

To contact the reporter on this story: Stefania Bianchi in Dubai at sbianchi10@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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