October 11, 2016 / 1:21 PM / a year ago

VTB considers reducing London presence

LONDON, Oct 11 (IFR) - Russian bank VTB said it could reduce staffing in its investment bank in London, but the decision hinges on the outcome of Britain’s talks to leave the European Union.

Britain voted to leave the EU in a referendum in June but it is unclear whether that will mean the country leaves the single market and its benefits, including the ability of financial firms regulated in London to be able to provide services throughout the EU.

The Russian state-controlled bank already has the headquarters of its European “sub-holding” in Vienna, giving it a base to operate from within the EU. That is used to operate its Austrian, German and French businesses from.

The bank’s investment banking division, VTB Capital, is based in London.

“Relocating from London or maintaining our presence there will depend on how Brexit unfolds,” the bank said after the Financial Times reported the bank may move its investment bank unit out of Britain. “Due to Brexit, VTB will be adjusting its activities in London but there is no intention of closing our business there.”

The bank said it had no current plans to move its European base from Vienna. “The HQ will continue to operate unchanged.”

That could change as part of its strategy for 2019, which has yet to be decided. “The issue of VTB Group’s European headquarters is being carefully considered.”

Frankfurt and Paris may be considered as alternative locations and a decision will be taken later this year. However, London is no longer being considered as an option.

“We did have bigger plans for the London office, but after Brexit we are scaling them down and building them up elsewhere,” VTB chief financial officer Herbert Moos told the FT in an interview.

There has been persistent speculation that banks could move investment bankers out of London as a result of Brexit.

Ahead of the referendum HSBC said it might move 1,000 jobs to Paris and Morgan Stanley had said it could make more use of its Dublin office. Goldman Sachs was reported last weekend to be considering moving 2,000 people from London, but it subsequently said no decisions had been made.

As an entity 61%-owned by the state, VTB has been subject to sanctions by the EU. That has not prevented it being active in the Russian capital markets this year, most notably being the sole adviser to the sovereign on its return to the capital markets in May with a US$1.75bn 10-year 4.75% bond issue.

It has advised on 55 Russian DCM deals in the first nine months of this year, which raised US$9bn cumulatively, giving it a 49.5% share of the Russian market. (Reporting by Christopher Spink; Editing by Ian Edmondson)

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