What Sanctions? JP Morgan and Goldman Sachs Are Now Top Three Investment Banks in Russia

Sanctions are for rubes (ie German toolmakers), US bankers will continue to get their slice

Wed, Apr 26, 2017
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Can you name the top three investment banks in Russia? The first is Russia's own VTB Capital. As of this year, the second and third are JP Morgan and Goldman Sachs.

Both Goldman and J.P. Morgan subsidiary offices in Moscow lead the leaderboards of dealmakers this year as of April 20. Deals they have participated in include but are not limited to equity offerings, bond issues, and loans.

Investment banking deals rose 32% in the 12 months ending April 20 compared to the same period in 2016, according Madison Avenue based consultancy Freeman & Co. Those two name brand investment houses have been riding the trend all year.

VTB Capital was the market leader again with 18% of the market share in investment banking fees, or about $16 million as of April 20. Goldman and Morgan's appearance on the board marks the first time either of them have appeared in the top three in five years, bne IntelliNews reported. JP Morgan trails VTB with an 11.4% share, or about $10 million in fees this year. They are up from sixth place last year.

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US sanctions ban American capital from working with Russian banks, but US banks are still allowed to loan money to Russian companies directly. Gazprom for example has been highly successful in selling company bonds to western investors.

Current U.S. sanctions on Russia ban joint ventures in oil and gas exploration, including financing oil and gas drilling and exploration, and technological swaps.

The U.S. also has sanctions on Russian banks, banning U.S. companies from receiving money or loaning money to Russia's sanctioned banks. VTB Bank, which owns VTB Capital, is one of the banks sanctioned by Washington.

Sanctions do not ban American entities from other sectors of the economy, nor does it ban advisory services. While much of this is open to interpretation by government courts, American firms are allowed to broker deals with Russian companies and those that have done so feel confident that they have not broken sanctions rules.

This now includes two of the biggest banks on Wall Street, and one that is firmly part of the Trump Administration.

Hey, Russia is finally out of recession. You didn't honestly expect US bankers would miss out?

Russia's current account surplus rose to $23 billion or 2.5% of GDP in the first quarter. The trade surplus rose to 7.4% of GDP. Russia’s foreign exchange reserves now stand at $398 billion, when two years ago the Ukraine activists here in the U.S. were hammering on about how Russia was a day ahead for bleeding its reserves dry to save the ruble.

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