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. Last Updated: 07/27/2016

Committed Investor for United City

Preparing for quick growth in Russia's financial markets, London-based investment bank MC Securities will take a controlling interest in the company that runs Moscow brokerage United City Bank, company officials said Monday.


"That investment is committed now and will be made irrespective of the outcome of the [June 16 presidential] election," said United City Bank Chairman Alexis Rodzianko.


MC Securities will raise its stake in the joint venture that runs United City Bank to 60 percent from 45 percent, he said. The Russian partner in the joint venture is oil product trading company Sintez, which actually owns 100 percent of United City Bank but leaves management to MC Securities.


At the same time, Belgium's Banque Bruxelles Lambert is set to take a majority stake in MC Securities, providing cash the young investment bank needs to become a "major player" on the Russian market, Rodzianko said.


Negotiations with the Belgian bank, an original shareholder in MC Securities, which holds a 29 percent stake, are still under way. But the decision to take 51 percent has "in principle" been made, Rodzianko said.


He said MC Securities' capital base of $75 million was insufficient for the bank to act as a major player on the Russian market -- which, along with the Czech republic, is one of MC Securities' target regions.


"It will give us the additional base which will allow us to grow and to accommodate what we think will be extremely rapid growth in this market," Rodzianko told reporters at the firm's new headquarters in central Moscow.


Strong and profitable, Banque Bruxelles Lambert is a $110 billion bank that will likely grow in the near future, he said.


Christopher Granville, head of research for United City Bank, said eliminating the "systemic political risk" of the presidential ballot will clear the way for strong economic growth and capital inflows. If policy remains stable, he said, prospects for both are great.


The financial markets should see inflows of foreign portfolio and direct investment as well as the repatriation of Russian flight capital and domestic capital flows, Granville said.


MC Securities was established in 1994 by Hans-Joerg Rudloff, former head of CS First Boston's Moscow office. United City Bank began operations in the spring of 1995.