Bank of America Merrill Lynch is ramping up in Russia and Poland to tap into their growth prospects and privatisation deals, one of its top investment bankers said. The biggest US bank is looking to boost its market share in Poland, after a recent batch of hires, and in Russia - a key "growth engine" for the bank, said Andrea Orcel, BofA ML's president of emerging markets, excluding Asia.
"Right now, Russia will be our main growth engine as it has a similar potential to Brazil, but we have started to seriously invest at a later stage. We are determined to bridge that gap," Orcel told Reuters in a telephone interview. Russia and Poland are however notoriously tricky markets for investment banks. Despite a surge in privatisation deals in Poland, fees for government-related work are typically low.
Orcel, who is also executive chairman of global banking and markets and a former senior Merrill investment banker, said the merger with Bank of America struck at the height of the financial crisis made a move into these markets more viable. "Our relevance to local clients is no longer restricted to mainly traditional advisory and capital raising, but extends to the full range of corporate banking services," he said.
Orcel said the bank had "tremendous growth opportunities" for its business in Brazil and plans to expand throughout Latin America, including in Mexico, and in other key emerging market hubs, such as South Africa, Turkey and the Middle East. Orcel acknowledged that recent market turmoil inevitably affected the bank's plans. Bank of America will cut 3,500 jobs this quarter, according to an internal memo seen by Reuters on Friday, to join rivals cutting jobs as trading activity slows.
BofA ML was still being aggressive in its expansion, but was "controlled," he said, adding: "Everyone is controlling investment a lot more closely". The bank is keen not to spread itself too thinly by expanding into peripheral or smaller countries where it may not make much headway. "With our scale and product offering, it doesn't make any sense - and it is actually risky - to be top 10 in a smaller market," Orcel said. Poland will be a key market and serve as a base for the broader central and eastern European region, Orcel said.
The bank has added senior bankers in the country so it can compete to advise on the country's privatisation drive, such as last year's $420 million initial public offering (IPO) of the Warsaw Stock Exchange. Merrill had previously advised on deals in Poland, but recent restrictions by the government made it harder to work on these without a sizeable presence there.
Other international investment banks are also looking to cement their grip on Polish deals. UniCredit, Goldman Sachs and J.P. Morgan have dominated the equity adviser rankings in Poland so far this year, according to Thomson Reuters data. BofA ML is also aiming to build on relationships with companies investing in the country, including Spain's Santander - a bank Orcel has advised on deals in the past. Santander bought Bank Zachodni, Poland's third largest bank, for $5.6 billion earlier this year.
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