The US and EU sanctions in Russia are taking their toll on some of the international firms located in the country with Allen & Overy’s (A&O) Moscow office offering redundancy packages at associate level.
Four associates, including two senior associates, have been made redundant in the Magic Circle firm’s Moscow office as it consolidated its capital markets practice within its broader finance offering in late October. The practice has also been hit as Russian law partner Alexandra Fasakhova, who specialises in capital markets, is currently on maternity leave.
A spokesperson for the firm said: ‘Following a review of our Russian business, we have decided to scale back our Russian law ICM practice, consolidating it within our wider finance team. Regrettably, this is resulting in a small number of redundancies. This adjustment reflects anticipated demand for local capital markets advice in the foreseeable future. We remain committed to our business in Russia and to meeting the changing needs of our clients in this market.’
The decision to scale back its Moscow-based capital markets offering comes as US-led sanctions continue to affect the debt financing capabilities of some of Russia’s largest banks, leading to a stark halt in Moscow-based capital markets work.
According to the firm’s website, A&O Moscow office currently houses six partners, two counsel and 20 associates. Of the six partners, five have experience of offering capital markets advice as well as US capital markets counsel Cameron Half.
A&O confirmed it has no intention of closing its offering in Moscow and said it would be ‘unthinkable’ to close down considering the depth of their services and clients. One Moscow-based A&O partner said: ‘Our capital markets team has scaled back, but we still have a strong finance practice.’
The US and EU sanctions, which started in March 2014, have had a hammering effect on Moscow’s business market, which has caused a number of firms to scale back on headcount, especially within firms’ capital markets practices, mainly because of the debt financing restrictions that were imposed on Russia’s largest banks including the Bank of Moscow, Gazprombank and VTB Bank.
One A&O partner commented: ‘There is a clear trend towards attrition in the Moscow legal market. Some areas, like capital markets, are affected more than others. But Russia is a market where firms have to take a long-term view and understand that the market is currently distressed.’