What does Otkritie's cancelled IPO mean for all its bankers who thought they were about to become rich?
How would you feel if you'd joined a new and growing organization with the promise of a lot of stock which you'd be able to cash out of when the company IPO-d and then that didn't happen?
This is the situation now faced by senior staff at Otkritie.
The Russian bank has been saying for the past year that it intended to hold an IPO in 2012-2013.
This week, however, Boris Mints, Chairman of the Board of Directors, said the IPO will be delayed three-five years.
The delay may cause rumbles of discontent among the people Otkritie hired in the past 24 months - who joined a growing company which they thought was about to go public. Otkritie has been on a big expansion drive. In 2010, for example, it hired 50 traders, brokers and sales managers from RenCap at a cost of $40m. In 2011, it opened new offices in London and New York.
Now, however, it's not only the IPO that's been cancelled, it appears to be big expansion plans. Otkritie is engaged in a process of 'personnel optimisation' and is cutting 700 staff, a reduction of 15-20%. What looked like a growth story with an IPO has become a privately owned bank on a cost-cutting drive. This could yet have implications for staff retention in 2012.
