Director of Equity Financing, FINAM Investment Company, Moscow
Skyscrapers in Moscow
Last week Kommersant daily carried an article that discussed the revenues of investment banks now operating in Russia. It is interesting to note that according to the Russian finance website offerings.ru, there are 35 investment banks now involved in IPOs and mergers and acquisitions in Russia. Kommersant cites a research paper by Dealogic, according to which the top 5 Western investment banks earned $ 200 million in the first quarter of 2007.
Deutsche Bank in Russia enjoyed a strong first quarter 2007
Here are some details on their revenues for Q1 2007:
- With the advent of major world banks to Russia, competition is increasing and that greatly affects the volume of revenues -- competition has forced many banks to lower their fees;
- IPO transactions are the most profitable for investment banks; however, while remunerations of the banks elsewhere are 6%, in Russia the median number is 2.5% (in Sberbank's case it was 1%). And this represents a decline of between 4% and 7% in fees collected in previous years;
- The least profitable transactions are debt securities with commissions of 0.5% - 0.7% (this represents a big drop from 2005 when issuers of Eurobonds could collect a 2% fee);
- Deutsche Bank was the leader with $41.02 million in revenues from 20 transactions;
- JPMorgan collected $38.94 million from 11 transactions;
- Credit Suisse collected $ 38.7 million from 15 transactions;
- Morgan Stanley made $ 37.02 million from 13 transactions;
- Citigroup made $ 35.77 million from 20 transactions.
Foreign banks operating in Russia are now trying to diversify their services, and some banks are pursing more active involvement in M&A deals. As an example, on April 19, 2007, Merrill Lynch Securities started trading on the MICEX.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and do not necessarily reflect the views of the FINAM Investment Company. To read more Russia Blog posts about Russian capital markets, click on the finance section or type www.russiablog.org/finance in your web browser.