A hiring freeze across Moscow's big banks and brokerage firms is starting to thaw as hunger pangs for Russian risk appetite begin to rumble.
VTB Capital, the investment banking subsidiary of VTB Bank, is leading the way by putting hiring back on the agenda. The bank recruited two senior sales executive recently and a senior research executive.
In response to the banking crisis, VTB had introduced a hiring freeze across the group and a number of cost-cutting measures, including the postponement of the move to new headquarters.
Herbert Moos, chief executive of VTB Capital, told EmergingMarkets.me that the bank is taking a measured approach in the current economic climate to adding to its 500 strong investment banking team.
He said: "VTB Capital has a well defined business plan that supports the appointment of key roles which are critical to the achievement of our goals. VTB Capital has ambitious product and geographical growth plans, and our focused hiring will enable us to achieve those. However we remain diligent in the rate and pace of recruitment activity across our business."
Moscow investment banking sources also confirmed Deutsche Bank, Morgan Stanley, Nomura, Troika Dialog, Sberbank, Aton, Otkritie and Metropol were actively hiring in the market or seeking new recruits for selected positions.
Headhunters based in Moscow confirm the pickup in hiring at the banks. Victoria Zvonareva, senior consultant for banking at Morgan Hunt Selection, said hiring at invest firms and brokerages has been more active since April.
Zvonareva said: "We are now working with two big investment companies on projects for investment director, portfolio manager, trader and CRMment."
Taras Rybak, a managing partner at Brain Source International, said: "As markets are picking up,we are seeing selective hiring by financial institutions. People are becoming more optimistic and realized that they can't sit still forever. This doesn't mean that everyone will be increasing headcount but I definitely believe there will be more opportunities soon."
Last year's Russian banking crisis devastated Moscow's investment banking landscape. KIT Finance was the first fall after being forced to seek emergency state funding before being sold to state entities Alrosa and RZD.
Renaissance Capital was forced to accept a $500m investment last September from billionaire Mikhail Prokhorov in return for the sale of a 50% holding while Troika Dialog has since sold a 30% stake to South Africa's Standard Bank.
Rencap, once the standard-bearer for Russian investment banking, has slashed 40% from its headcount and pared many operations to the bone. The cull seems to have ended for now but well-remunerated senior executives are still being shown the door. The latest to leave is Rod Barker, chief executive of Renaissance Investment Management in the UK.
A spokesman for RenCap in Moscow said the bank was hiring selectively.
Sentiment amongst the bulge bracket brokerages and Western fund managers for Russia has ticked up a perceptible notch or two in recent weeks for the first time in 2009.
Russian stocks were yesterday upgraded by US bank JP Morgan to 'neutral' from 'underweight' while China was downgraded.
In a research note, JP said Russian stocks were benefiting from a decreasing risk premium, the government's growth policies and the likelihood of earnings upgrades by analysts.
The dollar-denominated RTS index has leaped by 50% this year, which is the second best performer globally. The ruble-denominated MICEX index has soared by 62% in 2009.
Russia-dedicated funds continued to attract steady, if unspectacular inflows, according to fund data trackers EPFR. Russia received $79m last week following the previous week's tally of $81m, bringing in an accumulated $462.7m over nine consecutive weeks of inflows.
In the credit markets, Russia's credit default swap rate hit their lowest price since just after the implosion of Wall Street bank Lehman Brothers last September. Last week, Russian CDS fell by 32 basis points to 271 basis point, as oil prices continued their upward climb towards $60 a barrel.
Investment banks' perception of risk in Russia seems to have finally subdued given JP Morgan's latest rating. Other positive indicators that appetite for Russia is rumbling again are the CDS spreads mentioned above, higher hydrocarbon prices and sovereign bond yields.
While many Russian hedge funds anticipate further market contraction over the next year, most feel confident Russia and other selected emering markts present the best long-term growth prospects.
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