Troika Hopes to Break Even Next Year

ISTANBUL — Troika Dialog expects to make almost no profit next year as the global financial crisis deepens, managing director Andrei Sharonov said Friday.

"It's a difficult, tough time," Sharonov said in an interview at the World Economic Forum in Istanbul. The bank will aim for a profit of "around zero" after net income tumbled to $100 million this year.

In January, Sharonov said Troika had a net profit of more than $200 million last year, while revenue increased about 30 percent to $700 million.

Standard & Poor's revised its ratings on 13 Russian financial institutions on Oct. 10, including Troika Dialog and Alfa Bank, cutting their credit outlook to "negative" from "stable" because of continued turmoil in global credit markets. The credit squeeze will put pressure on banks by increasing the cost of borrowing, tightening liquidity and reducing profits, S&P said.

Sharonov said the crisis was also creating "new opportunities."

"It's M&A deals, it's distressed assets, it's involvement in government programs for revitalization of the financial system and the real sector of the economy," he said.

Troika, which was founded in 1991, is still considering an initial public offering, Sharonov said. In May, Troika chairman and chief executive Ruben Vardanyan said an IPO might take place in 2010.

"We are still thinking about further opportunities and the development of the company including an IPO, including some strategic deal with some big guys," Sharonov said. "Now we are discussing such developments."

Troika and Sberbank, the country's biggest holder of ruble deposits, both posted denials on their web sites last month of reports that the state-run retail bank would buy Troika.

Sharonov on Friday also called for more "consistent" regulation of the country's stock markets. "Now we have about six different governmental entities which deal with the financial markets," he said. Frequent market closures amid the turbulence "don't create confidence," he added.

Sharonov, a former deputy economy minister, said the government's $200 billion crisis package was a "good step," though he cautioned that money injected to prop up the banking sector "doesn't drain through the system to the final destination, to the real sector of the economy."