Renaissance Group Cuts 100 Staff

Renaissance Group announced Thursday that it was cutting 100 jobs, saying it was necessary to rework its business to address the effects of the global economic crisis.

The firings were the first major layoffs announced in the country's financial sector and are likely to be followed by more as banks and investment firms struggle to deal with deepening market malaise.

"Renaissance Group is reducing its headcount by 100 people as it continues to adjust its business structure and resources to best reflect current market conditions," Renaissance Capital spokesman Quinn Martin said Thursday.

Martin said most of the cuts would be in Moscow and will affect a number of different departments.

The group employs 1481 people in offices worldwide, including London, New York, Ukraine, Kazakhstan, Cyprus, Nigeria and Kenya.

The move comes three weeks after Mikhail Prokhorov's Onexim Group paid $500 million for 50 percent minus one share stake in Renaissance Capital, the investment banking arm of the group.

That sum was just a fraction of the reported $4 billion that VTB had offered for the company in 2006.

In September following the deal, group CEO Stephen Jennings described the bank's position as "very strong," while Prokhorov said Onexim was looking to take the business to the next level, leaving the rest of the investment banking market behind.

Onexim Group representatives could not be reached for comment Thursday.

Moody's Investors Service said Thursday that it is reviewing Renaissance Capital's long-term foreign currency and local currency issuer ratings.

Although the company is viewed positively for maintaining adequate liquidity, Moody's is reviewing it for a possible ratings downgrade given high volatility and downward pressure on asset values, the investor's service said in a press release.

The cuts at Renaissance Group come at the end of a two-year period of aggressive hiring, in which it doubled its staff in both 2006 and 2007.

Thursday's move looked like just the beginning of a wave of layoffs in a sector where banks are increasingly strapped for cash and have begun reviewing hiring policies that were formulated during a period of rapid growth on the markets.

Eighty-one percent of Russian companies surveyed last week by Cornerstone, a headhunting firm, said they believed that the financial crisis posed a real threat to the survival of their businesses. That number climbed to 100 percent for investment and retail banks.

Over half of the respondents -- 52 percent -- said they planned to deal with the crisis by optimizing staffing levels.

More than two-thirds of institutions in the investment banking sector and one-third in retail banking said they planned to cut employee bonuses.

"Job cuts have already started, but it's too early to offer prognoses on how serious the layoff trend will become," said Viktoria Zvonaryova, a senior analyst with Cornerstone. "The number of job cuts will probably peak in January of next year, as many banks are reviewing their HR policies right now, including their benefits packages and bonuses.

"Policies are different in every company, but the financial sector is definitely changing due to the global crisis," Zvonaryova said.

Gor Nakhapetian, managing director of Troika Dialog, said the coming wave of layoffs would be partly the result of overstaffing in the banking sector, adding that his company was not planning any layoffs.

"We're not creating new jobs," Nakhapetian said in an e-mailed statement. "We are only replacing employees who leave the company."

Renaissance Capital spokesman Martin said it would continue to hire selectively to fill senior positions.

Renaissance Capital, which hired John Porter as head of equity capital markets for new markets two weeks ago, announced the appointment Wednesday of Yury Gruzglin as head of its debt product group.