Investment banks in Moscow led by VTB Capital, Sberbank CIB and JPMorgan Chase & Co. endured a 67 percent slide in fees so far this year as the Ukraine crisis brought threats of stiffer U.S. and European sanctions.
Bankers collected $108 million on Russian deals through April 20, compared with $325 million a year earlier, according to data from Freeman & Co., a New York consulting firm. The slump included some of the most lucrative segments, with fees from mergers and acquisitions falling 33 percent to $46 million, Freeman reported. Income from syndicated loans plunged 88 percent to $13 million, bond fees shrank 76 percent to $28 million and equities tumbled 24 percent to $21 million.
“The reality is that 2014 is probably already a lost year,” Chris Weafer, a partner at Moscow-based Macro Advisory and former chief strategist at Sberbank CIB, said in e-mailed comments. “The second quarter is likely to be worse than the first quarter as the big international investment funds stay away from Russia until the political risk is a lot clearer.”
Violence over the weekend is undermining an accord that Ukraine, the U.S., the European Union and Russia reached last week to defuse the confrontation. Ukrainian and Russian officials traded accusations about responsibility for attacks that killed three during the weekend. The U.S. has threatened more sanctions against Russia’s banking and energy industries unless progress is made on carrying out the accord.
VTB Capital, a unit of Russia’s second-largest lender VTB Group, led the nation in fees last year from initial public offerings, mergers, bonds and loans, taking in $101 million, Freeman’s data show. Sberbank CIB was second with $58 million, followed by New York-based JPMorgan, the biggest U.S. bank, with $56 million.
Gazprombank and Paris-based Societe Generale SA were fourth and fifth, earning $53 million and $44 million, respectively. VTB, Sberbank and Gazprombank are all state-controlled.