April 26, 2012 / 8:30 AM / in 5 years

UPDATE 1-JP Morgan Russia head to retire, deputy steps up

* Russia veteran Costello steps down

* Executives say JPM cements leadership in Russia

By Megan Davies and Melissa Akin

MOSCOW, April 26 (Reuters) - JP Morgan’s Russia head Jeff Costello is to retire and deputy CEO and head of investment banking, Yan Tavrovsky, will replace him, the bank said on Thursday.

Tavrovsky rejoined JP Morgan in 2010 from Morgan Stanley . He had previously worked at JP Morgan in Moscow and London from 2000 to 2005.

“I was at JPM for five years - I left and came back - and I‘m very happy it was possible for me to take a greater role,” Tavrovsky told Reuters.

“Importantly, JPM is not just about investment banking but is about corporate banking and that is part of the excitement. We have a tremendous opportunity to grow in each of our product groups.”

Costello, 50, senior country officer for Russia and Ukraine and CEO of JP Morgan’s Russian bank, joined JP Morgan in 2008. He has lived in Russia since 1996.

”The plan when I joined in 2008 was to build out (the JPM business in Russia), build out the existing products and get the franchise to a market leadership position, and then replace myself,’ said Costello.

He will stay on as a non-executive director and will take over as chairman of the board of the local bank subsidiary for a period.

“We now have a market-leading position across our businesses - clearly in investment banking, while our sales and trading business has become increasingly strong and a market leader in the corporate space,” said Costello.

JP Morgan competes in Russia with international banks such as Citi, Deutsche Bank, Credit Suisse , Morgan Stanley and Goldman Sachs, as well as local players like VTB and Sberbank.

M&A and IPO activity has been lacklustre as euro zone debt concerns and market volatility have hampered companies’ abilities to raise capital, however many bankers forecast an increase in volume this year.

“The start of the year was slow but our expectation is that activity will pick up in the second half of the year,” said Tavrovsky.

“To an extent it will depend on market conditions and conditions in Europe, but we will probably see an increasing level (of deal flow) now there is more certainty on the political side.”

President-elect Vladimir Putin will be sworn in on May 7, ending a political transition in which opposition election protests shook investor confidence in Russia.

JPM advised Russian fruit juice and dairy products group Wimm-Bill-Dann on its sale to PepsiCo. It has relationships with Russian Railways, Gazprom and Sberbank and was a bookrunner for internet group Mail.ru’s IPO.

“We are very bullish on Russia,” said Costello.

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