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MOVES-Banks shift DCM staffing as Russia conflict rolls on

* Banks begin to trim Russia coverage

* Russian bond issuance at standstill

* More cuts expected if conflict continues

By Michael Turner

LONDON, Sept 29 (IFR) - Investment banks have begun trimming their Russia and CIS debt capital markets coverage as the tensions between Moscow and Kiev continue to stall business in the region.

Either through employees leaving the company or internal moves, many banks are reducing job roles from the closed down Russian market. For now the staffing changes are much more of a trickle than a flood, as banks are keen to keep a toe in Russian waters should the market reopen, but bankers warn bigger cuts may be necessary if business stays muted.

Alexandre Mougel is due to leave Bank of America Merrill Lynch, giving up his director-level position as head of Russia and CIS DCM, a job he has done since May 2011.

At UBS, Viktoria Beromelidze has left her executive director position as head of Central and Eastern Europe and CIS ex-Russia DCM.

Beromelidze has been in her Emerging Europe-focused role for more than seven years after taking up the mantle in May 2007. She has moved within the bank.

These banks are not the only places to see DCM staff departures. Deutsche Bank saw Russia-focused director level DCM banker Anatoli Kossarik leave his employer in June. Kossarik had been in his job at Germany's biggest bank for four years.

Spokespeople from BAML, Deutsche Bank and UBS declined to comment on the job changes or on whether the departing employees would be replaced. All of the bankers were unreachable for comment or did not respond to requests for comment.

One senior DCM official, not at any of the three banks, said: "Resources are being reallocated from Russia to other areas of the market. It's been very much in the executive director bracket."

The banker added that the job moves are more a result of trimming headcount than wholesale cuts.

At some banks, existing senior positions have been expanded to cover Russia and its surrounding regions to accommodate for staff leaving.

Stefan Weiler, a managing director in JP Morgan's DCM business, saw his coverage responsibilities increase to include Russia and Ukraine following the departure of Dmitry Gladkov in April.

The two markets add to a bulging portfolio for Weiler who has already broad coverage remit of Central and Eastern Europe, Sub-Saharan Africa, Turkey, Israel and Central Asia.

Natalia Lutova at JP Morgan also expanded her job role following Gladkov's exit to include coverage of liability management in CEEMEA, on top of her existing responsibilities for Central Europe DCM.

Other banks have shifted the job focus of their Russia-focused DCM staff to other markets that are seeing a pick-up in bond issuance, such as Poland, according to sources.


One bank where there have been broader changes is RBS, which last month made the decision to cut across its entire CEEMEA loans, bonds and derivatives business lines.

The bank's head of CEEMEA DCM and risk solutions Hasan Mustafa has already left the bank according to his LinkedIn profile, with deep cuts of 15 job losses across its CEEMEA debt and bond operations. The Middle East team was retained, with four DCM bankers including new head Marc Giesen.

While these cuts have long been telegraphed - RBS chief executive Ross McEwan said in February that the lender would become a "smaller, simpler and smarter UK focused bank" - the slowdown in Russia would have been a factor, according to a source.

It's easy to see why banks are assessing their CIS and Russian bond market resources.

The CIS ex-Russia has not seen a single bond sale in the third quarter, according to Thomson Reuters data. Even including Russia, only US$707.2m of bonds were printed in the region. These were through two niche deals in July - a US$300m Tier 2 offering from private lender Promsvyazbank and a CHF350m transaction from VTB Capital.

In contrast, there were US$12.62bn of bonds issued by CIS borrowers in the third quarter of last year, with US$11.438bn coming from Russian entities. Sanctions against Russia are undoubtedly to blame for the drop-off in business.

However, this sobering statistic will likely change for the better in the coming weeks. Kazakhstan is marketing a potential bond. The sovereign is meeting investors in London today, before heading to the US and finishing in Los Angeles on October 3.

The performance of Central and Eastern Europe ex-Russia in the third quarter is down slightly on the same period last year. Issuers from the region printed US$4.9bn of bonds in the three months from July to September in 2013, Thomson Reuters data shows. This year, they have priced US$4.7bn of deals.

Although some corners of the market see it as unlikely, should the deal drought continue into next year it could mean job losses on bond desks, according to a banker.

"If [Russia's capital markets] are shut for six months more, we will see more redundancies," said the banker, "though I'm more optimistic we will see Russia come back." (Reporting By Michael Turner; Editing by Sudip Roy, Alex Chambers, Julian Baker)