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. Last Updated: 07/27/2016

Jordan to Lead Lehman Venture

bloombergNicholas Jordan pictured in 2003
Lehman Brothers is due to open its first Moscow office, hiring Russia hand Nicholas Jordan to lead the investment bank's foray into a market supported by stable economic growth and awash in petrodollars.

Lehman's activities in Russia came to a near standstill after the August 1998 financial crisis, when Western and Russian banks suffered billions of dollars in losses. The bank is one of the last to re-enter the Russian market, with Goldman Sachs and Merrill Lynch opening branches in Moscow in recent years.

"Lehman had an interesting proposal in that it was offering a blank slate," Jordan said by telephone from London on Friday.

Lehman, which manages $255 billion in assets worldwide, poached Jordan from his position as co-head of investment banking in Russia for Deutsche Bank in London.

Officials at Lehman declined to comment on details of the move. A source in Russian finance who requested anonymity said the bank had already applied for licenses to operate in the country.

"I know for certain that they're in the process" of getting licenses, the source said.

A Lehman spokesman in London only would say that the bank was "considering the opportunity."

"We will conduct due diligence before we make any decisions," the spokesman said.

Lehman has been extremely cautious in taking steps toward Russia. The bank declined to disclose how much it had lost in the 1998 default. Credit Suisse First Boston lost about $1.3 billion, UBS Warburg lost over $450 million and Citigroup recorded $400 million in losses.

Despite creeping state control over major sectors, the country's booming economy continues to be a major draw for foreign investors.

"They must pay attention to the fact that lots of existing global clients are doing business in Russia," Jordan said. "It's hard to justify not being where the clients are."

Jordan declined to comment on Lehman's timetable for setting up its business in Russia, saying it was "pretty far away." He said he would likely move to Moscow after one month.

Jordan, a U.S. citizen of Russian heritage who is believed to have close ties to the Kremlin and Gazprom, has long experience in the country. He oversaw the creation of Deutsche UFG in December 2005, when Deutsche Bank fully acquired Moscow-based United Financial Group.

"We believe Nick has done a lot to integrate Deutsche Bank and the UFG team, and we wish him good luck in his new job," Charles Ryan, Deutsche CEO in Russia, said in a statement.

Jordan's brother, Boris, helped found Renaissance Capital and now runs the Sputnik finance group. Boris Jordan was appointed general director of NTV television by Gazprom in April 2001, as the gas giant took control of the television network founded by the exiled oligarch Vladimir Gusinsky. He was dismissed from the post two years later. Nicholas Jordan aided Gazprom-Media in its efforts to seize NTV and will likely benefit from his ties to the state gas giant.

"You can't take Russia out of the puzzle now," said one Western banker who requested anonymity. "You need to have a presence, but there's lots of competition and lots of learning to be done.

"It's a great market for incumbents and it's difficult for new guys to find where they can add value. That's why they're bringing in big names who have experience and connections here," the banker said.

The country's banking scene has seen a number of high-profile shake-ups recently.

Merrill Lynch last month hired Bernard Sucher, a former chairman of Alfa Capital and managing director and co-founder of Troika Dialog, as a managing director and head of global markets for Russia. Stephen O'Sullivan left his post as the head of research at Deutsche UFG earlier this month to manage Asia and Japan research for Macquarie Bank, Australia's largest investment bank.

"As one of the leading firms in the market, you don't want to lose too many of your senior staff, or people will start asking questions," said one banker with experience in Russia who asked not to be named, commenting on the two departures from Deutsche.