Stars of the New Russia

Global Finance, Apr 2004

Russian markets had a roller coaster ride in 2003, with the arrest of Yukos CEO Mikhail Khodorkovsky casting uncertainty over the relationship between business and the Kremlin. Still, Russia remains arguably the most exciting country in the developed world in which to do business. Global Finance magazine has chosen the banks and companies that are making the biggest mark on the volatile, exciting world of Russian business life. Global Finance editors talked to a wide range of market players and combined that with exhaustive analysis of third-party and company-own data to produce the second annual Stars of the New Russia 2004 awards.

BEST BANKS IN RUSSIA 2004

BEST DOMESTIC BANK

MDM BANK

In a tight field, this bank's independence, allied to its commitment to genuine intermediation, wins it the prize. MDM is a money-gusher, too, achieving a return-on-investment for the first three quarters of 2003 of 46.6%.

BEST OVERSEAS BANK

CITIBANK

Investment banking strengths would have made it UBS Brunswick (and Citi's bond team have had a quietish time in the absence of major hydrocarbon activity), but the world's premier global financial brand is digging ever deeper into the fabric of Russian life. It is the lead loan arranger in the country and is perhaps the strongest overseas contender in the booming consumer finance market.

BEST RETAIL BANK

ALFA BANK

Russia's blooming bourgeoisie makes a juicy target for a raft of customer-hungry banks. But Alfa's snazzy Alia Express chain combines with strong retail experience to make it still the one to beat.

BEST COMMERCIAL BANK

MDM BANK

MDM Bank has grown its Russian corporate book fast, without the benefit of links to allied industrial groups.That combines with a strong position in trade finance and allied skills to provide a robust offering to Russia's companies.

BEST INVESTMENT BANK

BRUNSWICK UBS

The Sibneft-Yukos merger may have evaporated (leaving just a tiresome league table spat in its wake), but no Russian house managed to combine advisory, research and primary markets ability into as strong an investment bank offering as this robust hybrid.

BEST FOREX BANK

ALFA BANK

Moscow International Bank puts up a strong showing in foreign exchange, but Alfa Bank, with its large domestic network and subsidiaries in Ukraine, Kazakhstan, London.Amsterdam and New York, is the dominant force. It is part of an industrial conglomerate, the Alia Group, which has interests in oil and gas, commodities trading and telecommunications, but the bank has recently shifted its strategic priorities toward commercial banking and away from inhouse banking.

BEST TRADE FINANCE BANK

ALFA BANK

Alfa Bank is one of the few Russian banks with accreditation to insure medium-term credits with the participation of the US Export-Import Bank, as well as with the export credit agencies of Russia's trade partners.

BEST SYNDICATED LOAN PROVIDER

CITIBANK

The global financial powerhouse dominates the syndicated loan markets for Russian borrowers, helping to bring a roster of corporate heavyweights to market. The Yukos affair provided a parenthesis in a year previously marked by plunging yields, lengthening tenors and the emergence of unsecured borrowings. Most players expect a likely sovereign upgrade to provide a benign background for this year's loan market.

BEST ENERGY AND COMMODITY FINANCE PROVIDER

BANK SOCIETE GENERALE VOSTOK

Runner up to Citibank in the loan league tables, SG combines advanced structuring know-how and sector expertise to hold onto this slot.

BEST PROJECT FINANCE HOUSE

RAIFFEISENBANK AUSTRIA

This is territory still best navigated with the help of official export credit, trade or multilateral agencies. In fact, true project financings were thin on the ground. Raiffeisen teamed up with the IFC to provide project financing for a project to expand a wood panel factory near Moscow for Swiss-based Kronostar. Still, that's small beer compared with deals bubbling under to finance looming projects such as the $10 billion Sakhalin LNG project.

BEST DOMESTIC UNDERWRITER

TRUST INVESTMENT BANK

This bank has targeted Russia's domestic bond market and tops the underwriter league tables. Like its rivals, it will need to revitalize its recipe to kick-start a market that stalled badly after a mid-2003 correction in yields.

BEST SECONDARY DOMESTIC DEBT HOUSE

TRUST INVESTMENT BANK

Primary market strength translates into secondary presence at this market specialist. The second-half 2003 correction wiped out some primary market excesses, but secondary market players have yet to undergo a real testing in this market cycle.

BEST DOMESTIC DEBT RESEARCH

BANK ZENIT

Russian corporate bond players regularly cite the quality of the debt market research of this tightly focused house. Zenit goes as far as issuing its own ratings in conjunction with a Russian magazine.

BEST EUROBOND ARRANGER

UBS

In a remarkable year for bonds from central and Eastern Europe, Russia has accounted for the lion's share of the action. A revitalized emerging markets debt team and UBS Brunswick's top-drawer address book has put UBS at the top of the bookrunner pile.