Investment banking on the wing

Andrey Shemetov, the youthful CEO of Moscow-based Aton brokerage has a lot of achievements under his belt.

Aside from heading a growing Russian financial institution, he also holds seats on the boards of both Moscow stock exchanges, is part of the government’s working group to turn Moscow into a international financial center, and is a three-time Russian skydiving champion.

His modest demeanor and friendly smile give nothing away. Without a hint of smugness he explains how he joined Aton as CEO in 2008 age 34 and won the Kremlin’s Investment Banker of the Year award in 2009 for his role in developing the company’s investment business after it was re-launched following a takeover from Unicredit Group.

“In Russia, 37 is not young. For the CEO of an American bank it might be, but we are not as big as the average American investment bank,” Shemetov says.

“Anyway, I don’t think age matters. It depends more on the person. If you are really excited by your job and you enjoy doing it, then you can be CEO.”

Muddling through

Shemetov began his financial career age 19 in the midst of economic transition, state privatization program and the general chaos of the 1990s. With no idea how financial markets worked and no teachers to turn to for instruction, businessmen at that time had little option but to learn on the job.

“Now you can start in a Russian investment bank as a small assistant and work your way up step by step. Nineteen years ago, that was impossible,” Shemetov said. “We learned from the most simple method possible – by buying things cheaply and selling for more.”

“We travelled around Russia and bought small blocks of stock and later sold them to buy stakes in larger companies. After that we created our small Russian company and slowly made it bigger.”

Education is the key

Lack of education, Shemetov says, is still one of the biggest problems encountered by Russian brokerages. While Russians have learned how to operate in global financial markets, knowledge of the sector among the general population is still extremely low.

Less than 1 percent of Russians know what the phrase financial markets means and less than 1 percent of the population uses retirement planning and life insurance, compared to some 70 percent in the United States, 40 percent in Brazil and 7-8 percent in Eastern Europe, Shemetov says.

“This is a historical problem – after 70 years of the Communist Party, we can’t suddenly be like America, especially not in the financial markets, because they are something new and people don’t trust them.”

Many Russians are still traumatized by bad experiences with stock ownership and savings in the turbulent 1990s.

Aton is making small steps to change this trend by implementing education programs, both for its existing clients and potential investors. The courses, which began in 2006, give small-scale investors guidance on risk assessment and how to use different financial instruments such as mutual funds.

“We use both Russian and foreign teachers at our training center because it is important to learn from what is going on in the West,” Shemetov said. “There are a lot of new ideas and things that we try to implement, but the difference between the West and Russia at the moment is too huge.”

Building bridges

Outside of Aton, Shemetov is contributing to efforts to reduce this gulf through his positions on the boards of Russia’s RTS and Micex stocks exchanges, which are currently being merged to improve the efficiency of Russia’s financial infrastructure. He is also a member of a working group to turn Moscow into an international financial center.

While optimistic about the ambitious goal, Shemetov says it is still very much in its discussion phases.

“The ideas we are discussing in the working group are very good, but there is a long way between the discussion and execution phases,” he says. “If just some of the things we are discussing are implemented, I will be happy.”

Difficult times ahead

But for the near future, Shemetov’s focus will be on steering his bank through the next wave of financial crisis.

“In 2008 the golden age finished. Now our work has become more difficult,” he says. “There is a lot of volatility on the markets and nobody knows what will happen in the next year, or even the next month… Maybe there will be a second wave of the crisis, maybe things will get better.”

But for someone whose main hobby is performing acrobatics while falling through the air at over 300 km/hour, market turbulence is surely just another challenge to overcome.

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