Staff improve prospects with MBAs

Banks have tried to increase experience by moving employees abroadSarah Butcher If you were young, talented, and Russian in 1996, then you could have done a lot worse than taking a job in one of Moscow's many banks. The financial sector was booming, Western banks were vying for graduates from Moscow's top schools, and the future held promise of greater demand for Russian-speaking financiers in the future. It was what Russians nostalgically term the Golden Age. But two years later, more than half of the gilded graduates were jobless.

For those working in the sector, it was a catastrophic period. Sasha Savin, a partner in the private equity practice at Bain Management Consultants, recollects estimates that hundreds of thousands of people lost their jobs, allegedly all of them in finance.

However, redundancies did not release a tidal wave of investment bankers. In 1996, Russian investment bankers were, in fact, few and far between. The vast majority of Russia's 1,300 banks were small commercial ventures. Larger banks were not in Russia for the M&A but for the fixed-income opportunities. Sergei Serdiokov at Korn/Ferry's Moscow office says that as big banks, such as Income Bank and SBS Agro Bank, nose-dived, it was the fixed income traders who suffered most acutely from the crash. Since the bottom of the government bond (GKO) market was busted through in 1998, demand for fixed-income people has never been quite the same. Stanislav Kiselev, at the Moscow office of headhunter Egon Zehnder, says that recruitment of fixed income staff was one of the fastest growing sectors before the crisis. Not so in the past two years. 'There isn't really any demand for fixed income people in Moscow now. It's better to be in private banking,' advises Kiselev. Private banking may be one solution, but for many Russian bankers, salvation has instead come in leaving Russia for a few years in the hope that things will improve. Exit has been easiest to achieve through international firms: in the wake of the crisis many reduced numbers and transferred their top staff elsewhere. Credit Suisse First Boston, Moscow's largest international presence at the time, reduced its 300 staff by a third. Jill Costello, HR director at Brunswick UBS Warburg in Moscow, says that they are now less than half their pre-crisis size. Nick Jordan, who ran Deutsche Bank's Moscow office until 1999, says that a lot of Deutsche's superfluous Russian staff came to Europe to work on broader mandates. By transferring Russian staff internationally, banks too are biding their time in the hope that Moscow will one day revive. 'Moving people abroad is a good way of increasing the experience of Russian employees who can be brought back when the climate improves,' says Costello. Trading assistant Alexei Druzhinin is one of the Russians transferred out of Russia by Warburg. He says that he was one of the lucky ones — friends in Moscow lost their jobs. Druzhinin came to New York through London. However, he has little intention of going back to Russia in the foreseeable future. 'Other locations offer greater opportunities for career progression,' he says. But a position outside Russia is not a fail-safe against redundancy. With opportunities in Russia still limited, many Russians in Europe are finding that their services are no longer required. Maxim Arkhipov, a trader who has recently been made redundant from his position on the Eastern European desk of a Western bank, says that a lot of his contemporaries in London have lost their jobs and been forced to return. He says that being Russian counts negatively, that there is little new demand for Russian knowledge. It does not help that the quality of this knowledge is questioned. Arkhipov has a degree from the Moscow State Academy, one of the targets for banks' recruiters. But Western-style economics and finance-related subjects are fairly new to Russia's education system: corporate finance textbooks were only translated in the early 1990s. Kasper Bartholdy, Credit Suisse First Boston's chief economist for Eastern Europe, Africa and the Middle East, says that specifically in the area of economics he tends to look for people with at least some Western education. As the sector is squeezed, Moscow banks' people demands are becoming more rigorous, and the shortage of properly qualified Russians is starting to show. At Brunswick UBS Warburg, Jill Costello says that it has proven harder to identify good people over the past few years, possibly for the simple reason that the number of candidates has so proliferated that it is more difficult to weed out the good ones. Costello's impressions are confirmed by Alfa-Bank — while it was easy to catch good people straight after the crash, this is no longer the case. 'Recruitment campaigns highlight the absence of people with adequate qualifications and skills,' says a spokesperson. This may yet change. In order to improve their prospects, Russians that left in 1998 have been acquiring MBAs. The London Business School, for example, started a loan scheme for Russian students in 1997 and has subsequently seen Russian MBA candidates increase, from one in 1996 to 19 in 2001. Insead and Harvard are also popular destinations for aspiring young Russians. But while Russian bankers are in Western Europe and the US, Western Europeans and Americans are increasingly looking at Russia. Russian banks have sought to capitalise on the disarray of international banks in Moscow after 1998, and are looking to hire top-quality staff to increase their own domestic and international presence. 'Alfa-Bank particularly appreciates Western experience in investment banking,' says its spokesperson. The appeal appears to be mutual. Ann Oroussoff-Jordan of Hydric and Struggles specialises in placing staff in Russia. 'Ex-pats are attracted to Russia because it provides an opportunity to build something from scratch,' she says. Contrary to rational preconception, the money is not bad either. 'Big Russian banks have an enormous amount of money,' says Orousoff-Jordan. 'When a good job is offered, I have not found it hard to entice people to work for them.'