Bank of America wants to expand dramatically in Russia, and yet its people seem to be leaving
As regulatory reform opens up the Russian market, Bank of America is moving into a position that will allow it to capitalise on potential growth and is seeking to gain a banking licence in Russia.
Bank of America currently operates in the country as Merrill Lynch Securities, which employs about 100 people and is licensed to carry out dealer and brokerage operations. With a Russian banking licence, it would be free to offer broader corporate and retail banking services and to carry out transactions in Rubles. In recent years, Russia has become far stricter about who it hands such licences to.
Ryan Challinor, Bank of America's Russia operations director, told Russia's Prime news agency that Merrill Lynch had big plans for boosting its staff in 2012, but declined to say exactly who he might hire.
Russia is an appealing market for international banks. By the end of 2012, the country should have a central securities depositary to settle trades and clear collateral, which is expected to increase confidence and boost trading volumes substantially. Equally, the promise of a large scale privatisation programme is tempting for banks which could stand to earn large fees as Russia's public companies are opened to private investors.
The only downside is that state owned banks like VTB and Troika seem likely to get much of work related to the forthcoming privatisation programme. This may be one reason why Bank of America appears to be losing staff in Russia. Last year, its head of investment banking for Central and Eastern Europe, the Middle East and Africa, left for VTB. Last week, Bloomberg reported that it lost two senior sales traders for reasons unknown.
