• ENG ENG
  • РУС РУС
  • 中文 中文
New York
London
Moscow
Hong Kong

31 July 2014 -  Thomson Reuters News: ICDI coordinates debute bonds placement deal of Rosinterbank in Asia

“JSC Bank Rosinterbank, a small Russian bank, is looking at issuing a 500 million dim sum bond and its executives have already met investors in Singapore, Hong Kong and Macau.

ICDI, a corporate finance house which has been advising JSC Bank Rosinterbank on the bond, said the bank expected good demand despite the new sanctions because it is privately-owned.

"Rosinterbank deposit income grew three times after the first wave of sanctions because clients choose private banks instead of state-owned ones," said Elena Trofimova, CEO of ICDI.

Trofimova said investors from Hong Kong, Mainland China and even London were interested in the deal and, after due diligence, ready to take part. "They said that politics is politics and business is business," she said.

 

 

 

ASIA A HARD SELL FOR RUSSIAN FIRMS SEEKING CASH  - RTRS

31-Jul-2014 01:44

  • Russian firms frozen out of international syndicated loan market
  • Banks cowed by BNP Paribas sanctions fine
  • Companies look at yuan bonds but market is small
  • Flows of Russian wealth to Singapore rising
  • Banks in Singapore are clamping down on who they let in



 

By Rachel Armstrong and Tessa Walsh

SINGAPORE/LONDON, July 30 (Reuters) - Russian banks and companies shut out of Western funding markets are unlikely to be greeted with open arms and ready wallets in Asia, international bankers and industry experts say.

New sanctions imposed by Washington and Europe over the Ukraine crisis have prompted firms such as VTB - Russia's second-largest bank by assets VTBR.MM- and Gazprombank GAZP.MM to look east for new sources of funding.

Banks and investors in Asia, however, are reluctant to get involved. This leaves the Russian central bank as the only obvious alternative, apart from Chinese currency bonds where borrowing costs are rising and the market is too small to plug the gap left by Western capital markets.

The Islamic bond market is also problematic.

The European Union and United States announced the sweeping sanctions against Russia on Tuesday, targeting its energy, banking and defence sectors in the strongest international action yet over Moscow's support for rebels in eastern Ukraine.

Wealthy Russians looking to park their money outside Europe and the United States also face a cautious welcome in Singapore, Asia's private banking hub, where wealth managers are increasingly picky about whose cash they handle.

"A lot of Russian money wants to come to Singapore but a lot of it is not clean, so banks have tightened up all their rules," said Satish Bakhda, chief operating officer for Singapore at Rikvin, which helps people and businesses set up companies.

"A lot have tried to incorporate companies, but when they open the bank account it becomes very difficult because the bank wants them to be resident in Singapore or know where the source of funds comes from - and that's where they get stuck."

On the corporate side, the possibility of blacklisted firms raising loans in any currency from syndicates of banks is close to zero, even in Asia, because lenders with U.S. branches and subsidiaries will not want to upset Washington.

The United States is already lobbying Asian governments to join the sanctions regime.(Full Story) Banks around the globe have also been cowed by a $9 billion fine imposed by a New York court on France's BNP Paribas BNPP.PA for doing business in Sudan, Iran and Cuba - countries which are also subject to U.S. sanctions.

Lenders are now taking a uniform stand, regardless of their base, on Russia. "Right now, all banks are acting the same, no group is any more or less cautious or sanctions-aware. It's all too important - Asian banks are the same as European or U.S. banks in this respect," said a London-based banker at an Asian lender.

Even Russian firms that have not been sanctioned are suffering as lenders reduce their exposure to the country. Chinese banks might be willing to consider a syndicated loan to such companies, bankers said, but only on a case-by-case basis.




 

DIM SUM

Russian banks on the U.S. and EU blacklists do not have much debt maturing this year and the central bank, which has international reserves of $472.5 billion, has said it will support any domestic bank hit by sanctions.

However, Russian banks and companies are looking at issuing debt in the "dim sum" market from bonds denominated in yuan that are sold outside China.

JSC Bank Rosinterbank, a small Russian bank, is looking at issuing a 500 million dim sum bond and its executives have already met investors in Singapore, Hong Kong and Macau.

ICDI, a corporate finance house which has been advising JSC Bank Rosinterbank on the bond, said the bank expected good demand despite the new sanctions because it is privately-owned.

"Rosinterbank deposit income grew three times after the first wave of sanctions because clients choose private banks instead of state-owned ones," said Elena Trofimova, CEO of ICDI.

Trofimova said investors from Hong Kong, Mainland China and even London were interested in the deal and, after due diligence, ready to take part. "They said that politics is politics and business is business," she said.

But the fresh sanctions are spooking sentiment, making it more expensive for Russian companies to access such funding. Yields on Russian companies' outstanding yuan bonds jumped on Wednesday with those on one Gazprombank issue soaring 100 basis points since July 16, when it was hit with an earlier round of U.S. sanctions. (Full Story)

Executives from Gazprombank were in Seoul last week to meet fixed income investors in a so-called non-deal roadshow.

The dim sum market is also too small to replace Russians' external financing needs. The entire market is worth around $110 billion, less than half of what Russian companies have borrowed in euro- and dollar bond markets in the past decade.

The Islamic bond market, around the same size as the dim sum market, is in theory an alternative option for Russian banks and companies but in practice its use would be limited.

Around two thirds of the Islamic bond market comes from ringgit deals out of Malaysia, a country that could be reluctant to do business with Russian firms.

The latest round of sanctions was prompted by Western suspicions that the pro-Moscow rebels shot down a Malaysian airliner over eastern Ukraine with a Russian-supplied missile. Moscow denied responsibility, blaming the Ukrainian military for the disaster in which 298 people died earlier this month.

The remaining third of the Islamic bond market is in dollars.



 

A NEUTRAL LINE

EU and U.S. sanctions on individuals have been restricted to a narrow group linked to President Vladimir Putin.

Notwithstanding the difficulties in opening accounts in Singapore, private bankers there say that inflows from wealthy Russians are up this year, attracted by the island's political stability, low taxes and its tendency to keep its head down when international conflict flares.

"Singapore treads a neutral line," said Sean Coughlan, managing director of wealth planner Asiaciti Trust Singapore. "That's attractive to clients who come from that part of the world (Russia) - what they don't want is to park their assets in a jurisdiction where tomorrow they find all their assets are confiscated or frozen, or they can't get access to them."

There is no official data pointing to a rise in flows from Russia but the latest available central bank figures show a 17 percent increase in assets under management from Europe in 2013. Cyprus, the former destination of choice for Russian cash, imposed capital controls and losses on large depositors last year to save itself from bankruptcy.

Russians wishing to move their cash to Singapore have to go to great lengths to prove that they are tax compliant. Singapore, anxious to avoid U.S. tax inquiries that have hit other financial hubs such as Switzerland, has brought in tougher rules around vetting new clients.

Bankers in Singapore say Russians looking for a new Cyprus have come to the wrong place.

"It takes around one to two months to open an account for a client from say Russia, especially if they’re using a complicated structure," said the head of the Eastern Europe team at a private bank in Europe. "By comparison for a client from a developed country opening a straightforward individual account it takes around one to two weeks."



 

(Additional reporting by Joshua Franklin and Katharina Bart in Zurich, Joyce Lee in Seoul and Megan Davies in Moscow, Writing by Carmel Crimmins; editing by David Stamp) ((carmel.crimmins@thomsonreuters.com)(+353 1 500 1529)(Reuters Messaging: carmel.crimmins.thomsonreuters.com@reuters.net))



 

Keywords: RUSSIA SANCTIONS/ASIA


Back to Company news archive
Conditions of use of ICDI website

CONDITIONS OF USE OF ICDI WEBSITE

Please read these terms of use carefully before using this website. By using this website, you signify that you have read, understood and accepted these terms of use. If you do not agree with these terms, please terminate use of the website.

RESTRICTIONS ON USE OF MATERIALS

This website and all material contained herein, including the design element, are owned by JSC International Center for Innovation Development (hereinafter referred to as ICDI) and/or protected by copyright law. No material from this website may be modified, copied, distributed, transmitted, displayed, reproduced, republished, sold or transferred in any way, without the prior written permission of ICDI, save that you may download one copy of the material on a single computer for your own use. Graphics and images on this website are protected by copyright and may not be reproduced or appropriated in any manner without the written permission of their owners. Product and company names mentioned may be trademarks or registered trademarks of their owners.

NO REPRESENTATION

Whilst reasonable care has been taken in the setting up and maintenance of this website, no representation is made or warranty given (either express or implied) as to the completeness, correctness, accuracy or reliability of the information and materials contained herein or the result of their use. You should always verify any information prior to acting upon it. Information on this website may contain technical inaccuracies or typographical errors. Changes may be made to information contained herein from time to time. ICDI reserves the right to make any and all changes to this website at any time at its sole discretion without notice. ICDI reserves the right to deny access to this website to anyone at any time.

DISCLAIMER

The information and materials in this website are provided "as is" and without warranties of any kind either expressed or implied. To the fullest extent permissible and subject and pursuant to applicable law, ICDI disclaims all warranties. Vertex does not warrant that the functions contained in the materials will be uninterrupted or error-free, or that defects will be corrected or that this website or the server that makes it available is free of any virus or other harmful elements.

LIMITATION OF LIABILITY

ICDI shall not have any liability (to the fullest extent permitted by applicable law) for any direct, indirect, incidental, punitive or consequential damages in respect of any information or content contained on or otherwise accessed through this website or for any actions taken in reliance thereon notwithstanding that ICDI or its authorized representative has been advised of the possibility of such damages.

SUGGESTIONS, COMMENTS AND FEEDBACK

Should you respond to a ICDI published document with information, including feedback data, questions, comments or suggestions regarding the content of any such ICDI document, such information shall be deemed to be non-confidential and ICDI shall have no obligation whatsoever with respect to such information and shall be free to reproduce, use, disclose and distribute the information to others without limitation.

Any communication sent by you to this website or otherwise to ICDI by e-mail are on a non-confidential basis and ICDI is under no obligation to refrain from reproducing, publishing or otherwise using them in any way for any purpose. By sending ICDI any information or material, you thereby grant ICDI an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that ICDI shall be free to use any ideas, concepts, know-how or techniques that you send us for any purpose.

LINKS TO OTHER SITES

This website may contain links to other sites which are maintained by third parties. Similarly, other websites may contain links to this website. ICDI is not responsible for the contents of such third parties' websites and shall not be liable for any damages or injury arising from the contents of those websites. Any links to other websites are provided solely for your convenience and does not imply ICDI’s endorsement of the linked websites or association with their operators. ICDI disclaims all responsibility and liability for the use of linked websites, which is accessed and used at the user's own risk.

Any third party wishing to establish links to this website must seek written permission from ICDI prior to doing so. ICDI reserves the right to deny permission for any such links to this website. If, however, ICDI gives its permission for any such links, ICDI is under no obligation to establish reciprocal links with such third party.

Where this website contains links to other websites which are not maintained by ICDI, ICDI is not responsible for the contents of those web sites and shall not be liable for any loss, damages or injury arising from the access to and use of those web sites. Nothing contained herein confers any license or right under any copyright, patent, trademark or other proprietary rights of ICDI or any third party.

Please send any business proposal to info@icofdi.com.