VTB Capital is quickly establishing a presence in Asia-Pacific, leveraging the leading equity and fixed-income franchises it holds in its domestic Russian market.
Part of the state majority owned VTB Group, the investment banking subsidiary is based in London and has operated with official licences in Singapore since 2009 and Hong Kong since 2011.
It has a clearly defined three-pronged strategy, as Damian Chunilal, chief executive for Asia at VTB Capital, explained to FinanceAsia at the bank’s Russia Calling! investor forum in Moscow last week.
“VTB Capital aims to intermediate all trade and FDI between Russia (and in the CIS where it has a core presence) and Asia, and especially between Russia and China for natural resources and increasingly infrastructure development,” he said.
“It is important for companies to have skilled, well-connected advisors for M&A in Russia. VTB Capital acts for both Russian and Chinese clients, and also provides a full range of corporate products and services, such as FX, transaction banking, payments, trade finance and letters of credit".
“VTB Capital's second main platform is distributing Russian securities to Asian investors, and forming private equity ventures across various sectors such as property, agriculture, infrastructure and the consumer,” he added.
“We are also developing an indigenous business in Asia, laying an anchor with Asian companies with whom we are nurturing strong relationships, especially in natural resources where we have expertise and can deploy our strong balance sheet. Also, onshore banking is a key longer-term strategy, and we have licences in China and India and a joint-venture in Vietnam,” he said.
Credit and rates are a significant part of VTB Capital’s business in Asia-Pacific. As Andrey Solovyev, global head of debt capital markets, said in a interview in Moscow, investors in the region, especially private banks, often take between 10% and 20% of Russian eurobond issues arranged by VTB Capital, and Hong Kong and Singapore are regular venues for roadshows.
The bank also places Russian deals denominated in Asian currencies, for example offshore renminbi, Singapore and Australian dollars, and achieves significant cost savings (20-30 basis points) when the proceeds are swapped back into US dollars or roubles.
VTB Capital continues to expand its Asian footprint by adding staff. Jason Fung was hired as head of Asia financing structuring on September 25 from Credit Suisse, where he had been head of the North Asia and emerging markets financing group since 2006.
On September 9, VTB Capital announced the appointment of two former UBS executives to its fixed-income department: Ben Jones heads fixed-income sales in the region and Vikram Shahi is in charge of multi product sales, India based in Singapore.
In mid-May, Xin Lin and Wei Chen joined VTB Capital’s Hong Kong office to help develop the bank’s China business. The former arrived from Nomura to head multiproduct sales for China, and the latter joined the corporate & investment coverage team for China after several years at Deutsche Bank and Lehman Brothers.
And at the start of the year, the appointment of Bryan Ko as head of investment grade credit trading completed the formation of the bank’s credit trading team in Asia-Pacific, following the hiring of Lewis Wong as head of illiquid credit trading, Asia, and Daren Wong as head of Asia high-yield trading in 2012.