Russia needs bankers, but Westerners struggle to compete

In the months that followed the 1998 Russian economic crisis many US and European banks closed their Moscow offices, convinced they had no future.

They must now be regretting their haste. Russia is on course for its fourth consecutive year of growth - GDP grew by more than 5% a year up to 2002. The main RTS index on the Moscow Stock Exchange has risen more than 50% in the past 12 months.

"Things are really happening out there and with developed markets down, everybody from fixed income specialists to corporate financiers are keen to participate, especially when the alternative is sitting at your desk in London or New York and waiting for the axe to fall," says Taru Oksman-Ison, a director at London-based Principal Search, who specialises in Russia and other east European markets.

"Over the past few years Moscow has changed out of all recognition as a place for professionals to live and pursue a career," she adds. '"ncreasingly, it is a sophisticated city able to hold its own with Western financial centres."

But for a Western banker, getting a piece of the action is not easy.

Though some of the biggest Western firms are still there - Morgan Stanley has a corporate finance unit, while CSFB is active in structured credit and fixed income, for example - it is other banks these days who are making the running.

Medium-sized Raifeisen Bank of Austria is one of the biggest Western players in Moscow, while Russian firms such as the Alfa Group, UFG and Renaissance Capital have grown in importance.

In a reflection of how much Moscow's financial markets have changed, foreign and Russian banks as well as the large Russian energy companies - which have extensive financial interests - increasingly employ Russian bankers rather than Westerners, for roles ranging from analysis to trading and corporate finance.

Only occasionally will they fill a position with a Westerner, and then usually one with fluent Russian and many years of familiarity with the market, and at a very senior level.

After 10 years of capitalism, many Russians are able to show CVs revealing several years of expertise on Wall Street, in the City of London or in Frankfurt, with backgrounds in everything from fixed income to derivatives/structured projects.

Many are happy to return home, knowing that in Moscow their skills will bring them more respect and seniority than abroad.

Salaries have also picked up, moving closer to Western levels, with $75,000-$85,000 (€76,000-€86,000) a year not unusual for a starter/mid-level position in various sectors, and equity analysts getting some $125,000. But headhunters say there is no standard.

"Similar roles within similar companies can command very different salaries. I can think of two guys in very similar roles - in M&A - with totally different packages," says Oksman-Ison.

Despite this - or maybe because of it - the Russians have had no problem attracting quality Western talent when it suits them, paying at or above the going market rate to pull analysts and bankers away from established firms.

One is Maarten Pronk, a Dutchman who is first vice-president of the Russian financial services group Nikoil in Moscow. He joined after 15 years working for ING, including stints in Latin America and Russia.

"As a foreigner, you'll only get a serious offer here if you're really needed," he says. "Medium-level jobs go to Russians now, and while senior jobs might not, you still need to have the language."' Pronk himself speaks Russian fluently.

Adam Landes is another Westerner who has found a job with a Russian firm, as an analyst of Russian energy companies based in London.

Formerly with JP Morgan, he now works at Renaissance Capital. Though not a fluent Russian-speaker, he had experience of working in Moscow.

"Enjoyable and resource-rich as JP Morgan is, it was difficult in such a large organisation to summon interest in Russian equities," says Landes. He says Rencap's other attractions include a considerably larger sales force and the strength of its advisory practice.

With energy prices expected to remain high, interest growing in Russian oil companies and Moscow's business profile continuing to climb, the outlook for Russia-related jobs looks likely to improve.

Landes is one of the first Western analysts to take advantage of the Russian revival, taking his seat among respected and Western-trained Russian nationals; he will certainly not be the last.