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Rlpc chinese banks try to boost share of russian loan market


Oct 3 Chinese banks are trying to gain market share by lending to Russian companies after a third round of US and European sanctions in early September shut nearly all Western banks out of the lucrative Russian loan market. This follows a push by the Kremlin to forge closer economic ties with Asian countries to offset deteriorating relationships with the West after Russia's annexation of the Crimea in March. Sanctions have hit the Russian loan market hard. Lending of $11 billion in the first nine months of 2014 was 73 percent lower than $40.4 billion in the same period of 2013, according to Thomson Reuters LPC data. Chinese banks are now looking to boost their profile and business in the Russian loan market while Western banks are unable to lend, bankers said."We have to take advantage of the situation over the next twelve months. We are looking for long term gain and if we end up being the only shop in town, that is great," a loan banker at a Chinese bank said. Talks include loans to sanctioned Russian companies as well as less controversial loans to non-sanctioned Russian companies, the bankers said. Lending to sanctioned Russian companies is a highly sensitive issue and any loans from Chinese banks are likely to be done on a low profile bilateral basis initially."Deals with sanctioned corporates will be under the radar between China and Russia. We are a major player in the global arena and we will look to take advantage of the market but not right in the faces of Western banks," the loan banker said.

Any loans by Chinese banks are likely to be denominated in Renminbi (Rmb) or roubles as Chinese lenders with large operations in the US will find it difficult to lend dollars in the face of sanctions."We will lend to our key clients in Rmb not dollars. We have a significant presence in New York and we are very conscious of doing dollar deals, even to non-sanctioned entities," a loan banker at a second Chinese bank said. OPPORTUNITY KNOCKS Chinese banks are already big lenders to state-owned and quasi state-owned Russian energy companies such as Rosneft and Gazprom and sanctions are allowing them to boost business with these clients.

"The relationship between Moscow and Beijing is strengthening and a number of long term agreements over energy pipelines are being discussed which will need financing," the second loan banker said. Rus Hydro, Russia's largest hydropower producer, said that it was planning an extensive roadshow to attract investment from China this week. Gazprom began construction of the giant 'Power of Siberia' gas pipeline at the beginning of September, which will carry $400 billion of gas to China after 2019. These deals follow Rosneft's $60 billion deal to supply China with oil in June. Putin advised Russian companies to forge close energy deals with Asia as Europe tried to cut imports of Russian oil and gas.

Some Chinese banks are now also willing to expand lending beyond existing state-backed energy clients to private Russian companies, which have previously been banked by European and US banks."The last round of sanctions clearly wanted to expand sanctions into the private arena by including Lukoil. This has opened up an opportunity for us to start looking at the private space," the first loan banker said. Western banks are currently exploring loans to non-sanctioned Russian companies, but remain wary of counterparty risk and are poised and waiting for a political solution to resume full lending."If the politics are sorted out, you wouldn't get a seat on a plane to Moscow the next day," a banker at a US bank said. Western banks are currently looking at two potential loans for non-sanctioned companies, but it is unclear whether they will be able to lend. Promsvyazbank has issued a request for proposals for a $300 million refinancing and an ongoing $250 million deal for Russian nuclear company Tenex is also under discussion.

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Rpt eu plans moving bank regulator from london as euro zone eyes city busi


(Repeats with no changes)* EBA to be relocated soon after Brexit, two EU officials said* Paris, Frankfurt most likely to host agency* Exit talks crucial for financial sector* Brexit likely shut City out of EU capital markets planBy Francesco GuarascioBRUSSELS, June 26 The EU is preparing to move its European Banking Authority from London following Britain's vote to leave the Union, EU officials said on Sunday, setting up a race led by Paris and Frankfurt to host the regulator. Coming a day after Britain's Jonathan Hill resigned and was replaced as EU financial services chief by the Commission's "Mr. Euro" Valdis Dombrovskis, the move underlines how the City of London can expect to be frozen out of EU financial regulation -- and possibly from Europe's capital markets -- depending on the terms of Brexit. While those who argued for Britain to leave the EU said the financial industry would thrive without EU shackles, some of its biggest employers including JPMorgan are scouring Europe to find new locations for their traders, bankers and financial licenses. The EBA, whose 159 London employees write and coordinate banking rules across the bloc, is expected to be relocated "soon", two EU officials told Reuters. All European Union agencies are based in member states. EBA chairman Andrea Enria said before Thursday's referendum that the watchdog, founded in 2011 to improve regulation after the global financial crisis, would have to move if Britain chose to leave. An EBA spokeswoman said on Sunday that the European Union will have to decide on relocation and in the meantime the agency would continue to operate in London.

Other European capitals are keen for a slice of Britain's financial services industry which contributed 190 billion pounds ($280 billion) to the economy in 2014, roughly 12 percent of economic output. Ireland said on Friday it had been in touch with firms considering relocating. The industry employs 2.2 million people in Britain including around 90 percent of U.S. investment banks' European staff and 78 percent of capital markets activity by the other 27 members of the EU taking place in the UK. Paris and Frankfurt are the two largest financial centres on the continent and are therefore seen as the most likely new locations for the EBA. Italy's financial capital Milan could also put itself forward."There are several reasons to believe Milan is the right place. Competition from Paris and Frankfurt is tough, but they may neutralise each other," Italy's former prime minister Enrico Letta told Reuters on Sunday. However, he said that any change was unlikely to happen quickly as it could fall under the negotiation of Britain's EU exit.

NO SPECIAL TREATMENT The exit negotiations, expected to start once Prime Minister David Cameron has resigned, will be crucial for London's position as a leading financial centre. The leading "Leave" campaigner and favourite to become the next prime minister Boris Johnson, said Britain would continue to have free trade "and accesss to the single market". But in Brussels, officials said it would be important to keep a tough line."The UK cannot expect special treatment for the City of London during the exit negotiations," said Sven Giegold, a German Green EU lawmaker.

Without a foot in the EU and the influence of Hill, a close Cameron ally, London's finance industry now faces a major disadvantage compared to other financial centres as the 19-state euro zone asserts its quasi-monopoly on EU financial business."The departure of Jonathan Hill marks the end of the multi currency union," one senior EU official said. "He was the symbol of the multi currency union and the appointment of Valdis Dombrovskis hands his role to the symbol of the euro."Britain is also at risk of losing its prized "EU passport" if it fails to secure continued access to the bloc's single market. Many U.S. and Japanese banks rely on the passport to operate across EU capital markets unhindered while basing most of their staff and operations in London. The City could also lose its position as an important centre for clearing financial transactions, the process of making sure that they proceed smoothly. The European Central Bank has tried before to strip London of its lead role in this market, arguing that clearing houses dealing with euro-denominated transactions should be in the euro zone. The ECB is likely to take up the issue again now that London is no longer in the EU. Britain also faces being shut out of the EU's most ambitious plan in years to tear down barriers to the movement of capital. The Capital Markets Union