Bank of America Corp. and Credit Suisse AG are among banks that will advise Russia on creating a global financial center in Moscow, said Alexander Voloshin, head of the government working group overseeing the effort.
Societe Generale SA, UniCredit SpA, Nomura Holdings Inc., Ernst & Young and KPMG International will also join the advisory board, Voloshin said in an interview. OAO Sberbank and VTB Group, Russia’s two biggest banks, Moscow-based investment bank Troika Dialog and development bank VEB will be represented. Sberbank Chief Executive Officer German Gref and Credit Suisse Vice Chairman Urs Rohner will lead the panel, Voloshin said.
“We chose those that have experience in launching big projects,” said Voloshin, 54, who served as chief of staff to former Presidents Vladimir Putin and Boris Yeltsin. “And those big banks that can bring business here.”
President Dmitry Medvedev signed a decree creating the panel on Dec. 29 after outlining plans to turn the Russian capital into a global financial center to help diversify the economy and reduce its reliance on energy exports. Moscow ranked 68th of 75 cities in the December 2009 Global Financial Centers Index commissioned by the City of London.
“We want to build an open economy,” Voloshin said in Moscow. “Developing the financial center will mean integration with Europe and into the global economy.”
Medvedev, 45, first announced the financial center plan in 2008. In June, he instructed the government to improve Moscow’s transportation and make legal adjustments so that investors feel “no less comfortable than in London, Geneva or New York.”
Medevedev named Voloshin to head the government working group on the financial center in July. The panel will work on proposals to improve infrastructure, financial and tax laws, reduce red tape and promote Moscow abroad. The advisory board will meet once or twice a year to discuss strategic issues.
“It’s a star team, to meet more often would be difficult,” Voloshin said. “We want them to help us and be our consultants on what to do and how to move forward.”
The push to turn Moscow into a financial center will depend on the willingness of major Russian companies to hold initial public offerings at home, Voloshin said.
The biggest Russian IPO of 2010 took place in Hong Kong, when Moscow-based aluminum producer United Co. Rusal raised $2.24 billion in January. Mail.ru Group Ltd., a Russian investor in Facebook Inc., raised $1 billion in London in November.
$1 Billion IPO
A $1 billion IPO by “a good, big” company could be a starting point, Voloshin said.
“We haven’t had a single major IPO on the Russian market,” Voloshin said. “If in a year or two we manage to hold a large IPO at home, and two to three a year later and then five to seven, it will in some respect indicate that Moscow is becoming a global financial center.”
VTB Capital, the country’s biggest equity underwriter, expects Russian companies to raise as much as $28 billion through public share sales this year, the most since 2007. Russia’s Micex Index has more than tripled since plunging as much as 74 percent in 2008.
Voloshin, until recently chairman of OAO GMK Norilsk Nickel, also helped reorganize Russia’s electricity industry as chairman of RAO Unified Energy System, the former state utility monopoly, along with Chief Executive Officer Anatoly Chubais.
“One should not expect a revolution,” Voloshin said. “But what we can do is to create a positive dynamic. There are issues that haven’t been under consideration for 10 to 15 years and haven’t been resolved for various reasons.”