RBC Wealth Management, part of Royal Bank of Canada, is to open a representative office in Moscow in response “to client demand” from Russia, WealthBriefing can exclusively report.

A source close to RBC said the group was close to appointing a head for its representative office in Moscow. “They have covered this region for many years but, due to client demand, are now opening shop in Russia,” said the source.

Michael Lagopoulos, president and chief executive of the international arm of RBC Wealth Management, confirmed to WealthBriefing that the group is looking to open a representative office in Moscow later this year.

“In the last 18 months we have opened representative offices in Beijing, Mumbai, Chile and Panama and have launched an onshore business in Brazil. Expansion into Russia means that RBC Wealth Management will have a presence in each of the BRIC countries, which we expect to be relatively high growth markets for the next several years,” Mr Lagopoulos said.

A number of international players such as HSBC and Union Bancaire Privée set up private banking shops in Moscow last year. RBC is the first major foreign operator to do so since a domestic banking crisis and a number of corporate flare-ups sent domestic equity markets crashing by 70 per cent in the last quarter of 2008. French bank BNP Paribas estimated that investors withdrew at least $280 billion from August last year through to 1 February 2009.

After the sell-off last year pushed the valuations of Russian companies to record lows, rising energy prices in recent months have drawn investors back into the market. The MICEX of major Russian company shares, for example, is up 105 per cent after hitting a nadir on 27 October.

Domestic wealth management players like Renaissance Investment Management have been badly hit by the crisis with equity valuations and client redemptions slicing their assets under management from $6 billion to less than $3 billion.

Industry sources suggested that some international players such as Julius Baer and Vontobel were rethinking plans to establish a presence in Mosccow.

Swiss private bank Lombard Odier Darier Hentsch said the fly-in fly-out model works best for its Russian clients.

Alexander Kotchoubey, head of international development for Russia and Eastern Europe at Lombard Odier, told WealthBriefing: “There is no substitute for "seeing for oneself" but I believe the experience level of bankers and the unique features that define life in Moscow and Russia would be incompatible with opening a true Swiss private banking rep office catering to high net worth individuals.

“As for other banks deciding to open a rep office, it would depend on their target clientele and their appetite to spend money for limited return,” he added.