Ex-Director of the European Bank for Reconstruction and Development for Russia, Denis Morozov, can already go to work in the Russian office of Bank of America Merrill Lynch in July, say the source for Forbes, close to the US investment bank, and the top manager in the financial market, familiar with the situation in the EBRD .
As explained by one of the financiers, Denis Morozov's new position is called "president", he will be engaged in the development of investment banking business in Russia, while the Russian office of BofA Merrill Lynch will remain in charge of his current head, Andrei Sergeyev. In the conduct of the ex-director of the EBRD, according to the source for Forbes, "strategic aspects of business" will be transferred. It is assumed that Morozov will advise the US bank on investment in major infrastructure projects and GR-management. The Russian office of Bank of America Merrill Lynch did not comment on this information, Morozov himself did not respond to Forbes' request.
Care due to sanctions
In May, the agency TASS reported with reference to its source that after leaving the EBRD, Morozov is considering a further employment option at the head office of BofA Merrill Lynch. On May 7, a government order on the release of Denis Morozov from the post of EBRD director from Russia appeared on the portal of legal information. Instead, he was nominated for this post by Sergei Verkashansky, the deputy Morozov. According to TASS, Denis Morozov should officially leave the bank on July 1. The financier represented Russia on the EBRD's Board of Directors since 2011.
Last fall, the development bank announced a reduction in its presence in Russia - in 2018 all regional offices of the EBRD will be closed, only units in Moscow and St. Petersburg will remain. Such a sharp turnaround in the EBRD's strategy is connected with the completion of the project to support small business, explained Anton Usov, the bank's senior advisor for Russia and the CIS. Since most of the regional offices were engaged in financing of small business, after the project is over, the EBRD does not need to "keep the branch network", said Usov. The remaining portfolio of EBRD projects in Russia of about € 3.5 billion will be managed from offices in Moscow and St. Petersburg.
Earlier, in 2014, the EBRD suspended investment in Russian projects in connection with US and EU sanctions. In 2016, the Russian authorities asked the leadership of the EBRD to reconsider this decision, as it violates the rights of Russia as a shareholder of the bank and contradicts its charter. According to the calculations of the Ministry of Finance, while maintaining the current policy of the EBRD, the bank's portfolio in Russia will be zero in 2-3 years. The Minister of Economic Development Maxim Oreshkin, in turn, predicted the EBRD "going into oblivion" without work in Russia.
The chief economist of the "Expert RA" Agency Anton Tabach admits that the Russian office of BofA Merrill Lynch might need Morozov's experience in interacting with major state and financial structures, which he worked for the EBRD in implementing large-scale infrastructure projects. "A specialist with such a back-yard usually brings with him a" notebook "with a very extensive list of contacts. Most likely, his appointment is connected with the desire of BofA Merrill Lynch to get a definite exit on interstate and state structures, "Tabach suggested.
Forbes' interlocutor from another development bank working in Russia agrees that the US bank could become interested in Morozov's ties at the state level and his expertise in GR. In support of this assumption, the track record of Denis Morozov, who managed to work as a top manager in the largest Russian exporting companies, including Uralkali and Norilsk Nickel, and for about 7 years represented Russia in the EBRD. During this time, he accumulated invaluable experience in GR, which will be extremely useful for an American bank that wants to maintain its position in the Russian market, says Forbes source.
The business of Western investment banks in Russia is now going through hard times. According to Thompson Reuters, commission incomes of investment banks operating in the Russian market fell to a minimum in three years to $ 30.2 million in the second quarter, which is almost half the amount of the first quarter and three times less than in the same period of the past of the year. In total, in the first half of 2018, banks earned $ 88.8 million, of which the lion's share was held by VTB Capital ($ 34.1 million), Gazprombank ($ 7.9 million) and ING ($ 7.1 million). Such dynamics is caused by a massive outflow of capital from emerging markets against the backdrop of the strengthening of the US dollar and the introduction of regular anti-Russian sanctions in April this year.
"It is not easy for Western banks to conduct business in Russia due to sanctions against the largest Russian borrowers and the absence of major transactions due to the economic crisis. In the foreign currency debt segment, foreign banks have already been ousted by Russian banks. Against this backdrop, Morozov's appointment to BofA Merrill Lynch looks like an attempt by the bank to preserve at least the status quo by gaining access to major infrastructure projects, "concluded Forbes, a source close to the US company.
In September 2017, the Russian office of Bank of America Merrill Lynch was headed by Andrey Sergeev, who previously supervised the investment banking business of the bank in Russia. Earlier, the bank for five years, led by Alexander Pertsovsky. Representation in Russia from Merrill Lynch appeared in 2004, before the merger with Bank of America, in 2007 it received a broker license. Currently, about 100 employees work in the Russian office of BofA Merrill Lynch.