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Andrey Kostin: “NYC office is definitely focused on Russia”


Melissa Lee: VTB Capital, the investment arm of Russia's second largest lender is opening its first and only US office this week in the New York City. Andrey Kostin is VTB's Chairman and CEO. He joins us now at Post Nine for a first on CNBC interview. Andrey, great to have you with us. What are your objectives here in New York City?

Andrey Kostin: Well of course New York is the major centre, financial centre in the world, so we are opening our brokerage company particularly focusing on trading with Russian fixed incomes and stocks, and also providing other operations like derivatives swaps foreign exchanges. So it's focused definitely on Russia. The office will also be providing extensive information on Russian companies and actually give an opportunity for American investors to invest in Russia.

Melissa Lee: You obviously see a lot of demand then here in the United States for information and a demand to invest in Russia.

Andrey Kostin: Yes, very much so. Of course the market is volatile now and very cautious but we still believe that particularly after the change of government and the inauguration new president we expect a new wave of interest towards investing in Russia. But for…

Simon Hobbs: Sorry, I didn't mean to interrupt you. What strategy are you adopting then to deal with those very big questions about dealing with Russia and dealing with the Russian government and dealing with Russian business? The misappropriation of Yukos, the way that Shell executives were treated over Sakhalin, the way that BP executives were dealt with over TNK, these are things that scare foreign investors. What do you say to them to allay their fears?

Andrey Kostin: Well I think after elections there's now a new programme which are being prepared by the new Russian government, with a large focus on privatisation. So I think it's around 850 companies which plan to be privatised and the government understands very well that to make a success we should substantially improve the economic environment and investment climate. Mr. Putin, yeah.

Simon Hobbs: But it's not following through in its promises. There was a promise to get the politicians out of business. I see on your boards you have the Deputy Finance Minister and another director who seems to work within the Ministry of Economic Development, so you actually have elements of the Kremlin embedded in your business.

Andrey Kostin: Well I put in the new decision over Mr Medvedev, all the bureaucrats will be removed from the Board of Directors. So we are moving in this direction.

Carl Quintanilla: People around the country might not appreciate how much Russians have influenced real estate in New York City, especially at the high end. It seems like every high dollar transaction involves a Russian gizillionaire, and I'm wondering how far along you think that story is? Are we in the beginning chapters of that? Closing chapters? Somewhere in the middle?

Andrey Kostin: You know of course have one of the most liberal control among all the BRICS countries for example, and Russian people officially can buy any property just make a registration with the tax office. So of course before elections they normally have this kind of situation when people are buying more, investing more abroad. But we call them destabilised after election

Simon Hobbs: Just to clarify what you're saying, money flows out of Russia before elections?

Andrey Kostin: Yes, normally it is true, yes.

Simon Hobbs: Why is that?

Andrey Kostin: Well I think it is because people always have concerns about elections, but normally it settled down if they're satisfied with the results and I think Mr Putin got very big support in Russia by having two-thirds of the vote. So I think that will settle down.

Carl Quintanilla: Well I mean, not that we're complaining. That's I mean, the Americans think it's just fine.

Andrey Kostin: Well it is a growth of real estate prices and demand in Russia as well. So it's

Simon Hobbs: But I just, can I just come back on the idea that everything's well in Russia, that the Washington Times

Andrey Kostin: I'm not saying everything's well

Simon Hobbs: The Russian

Andrey Kostin: otherwise we will not debate this issue.

Simon Hobbs: The Washington Times today is saying rarely has disconnect with the Putin regime been so high and they believe that it's only likely to increase when he can't follow through with his promises. A million are supposed to march through the capital

Andrey Kostin: No.

Simon Hobbs: at the beginning of next month.

Andrey Kostin: No, no, no. You've got a wrong impression. I mean I don't think there's more people were marching than in Wall Street, frankly speaking in Russia. Mr Putin received 64% of the vote in the first tour and there is probably dozens of thousands appeared in Russia, protestors a very broad spectres from social minority right campaigners to the hard-liners Communism or conservatives. So I think what we see now all around the world is a growing discontent and irritation among people because of the worst economic conditions, so and so forth. Plus of course there's certain discontent about Putin as well, but you can't have 100% vote and anyway 64% is a very convincing win.

Melissa Lee: All right, Andrey, great to see you, hope you'll come back soon.

Andrey Kostin: Thank you.  

Melissa Lee: Andrey Kostin of VTB.

Simon Hobbs: Good luck with the office. 

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