* Move is part of drive to cut costs
* Trading, private banking remains in Moscow
* Liquidity has drained out of Russia
* Russia CEO Hellman, Chairman Gindin, to stay
By Douglas Busvine
MOSCOW, Dec 5 Credit Suisse is to move
its Moscow investment banking advisory operation to London as
part of a cost-cutting drive, a source familiar with the matter
said, as a dearth of deals pushes foreign bankers away from the
The news on Wednesday marks a significant, but not complete
retreat from a market which Credit Suisse entered in the chaos
that followed the break-up of the Soviet Union and did not
abandon despite the hit it took in Russia's 1998 financial
The Zurich-based bank will also move its Moscow-based debt
and equity capital markets business to London, venue of major
recent Russian share offerings by Sberbank and mobile
phone firm MegaFon, the source said.
Credit Suisse was involved in both deals, propelling it to
the top spot in the year to date in Russian equity deals,
according to Thomson Reuters rankings. It placed 12th in debt
deals and sixth overall in Russia.
Switzerland's dominant banks have come under massive
regulatory pressure to cut risk and shrink balance sheets, while
Russian state rivals Sberbank and VTB are expanding
their own investment banking operations.
The move responds to a flow of liquidity away from Moscow
which - despite the Kremlin's efforts to transform the Russian
capital into a global financial centre - has failed to attract
Capital is leaving Russia at an annual rate of $80 billion,
reflecting concern about corruption, the weak rule of law and
the state-capitalist agenda pursued by President Vladimir Putin
since his return to power in May.
The CEO of Credit Suisse's Russian unit, Steven Hellman, and
Chairman Diana Gindin will stay on in Moscow to oversee trading
in fixed income and equities, and private banking. They will
continue to coordinate relationships with investment banking
clients on the ground.
A "handful" of roles will be affected as some senior bankers
relocate to London, the source added.
In a statement issued to Reuters, Credit Suisse said: "We
continue to be proactive about monitoring the size of our
business relative to client opportunities and market conditions.
"This involves realigning resources to growth areas and
adjusting capacity to meet client needs and to manage costs
across the business. Credit Suisse remains committed to its
clients in Russia."
As part of a major efficiency drive, Credit Suisse expects
to achieve cost reductions in its 2013 financial year of more
than 3 billion Swiss francs ($3.24 billion), rising to 4 billion
a year in 2014-15.
Credit Suisse was an early adviser on Russia's
post-communist privatisations but its then investment banking
arm, Credit Suisse First Boston, took losses of $1.3 billion
when Russia defaulted on its domestic debts and devalued the
rouble in 1998.
CSFB cut its Russia head count by a third after the crash,
but the Swiss bank went on to expand its presence in the boom
that followed Putin's rise to the presidency in 2000.
Foreign banks have found it increasingly difficult to
compete against Russia's state banks, which enjoy a funding
advantage and implicit guarantee from a sovereign that itself
has a strong balance sheet.
Pioneer Stephen Jennings, who came to Moscow with Credit
Suisse in 1992, recently sold out of the Russia-focused
investment bank he later founded, Renaissance Capital, after
saying that investment banking is one of the worst businesses to
HSBC closed its Russian retail banking operation in
2011, after just two years, following British peer Barclays
, which sold its retail unit at a loss.