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Evercore Halts Dealmaking With VTB Capital Amid Sanctions

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Evercore Partners Inc., the merger-advisory firm founded by Roger Altman, is ending a relationship with VTB Capital amid sanctions imposed on Russian companies over the Ukraine conflict.

“Evercore has been our trusted partner in the North American market,” state-controlled VTB Capital said in an e-mailed statement. “Currently, we are expecting more opportunities in Asia.”

The firms forged a partnership in October 2012 after New York-based Evercore advised a group of billionaires who were the sellers in a deal where oil producer OAO Rosneft paid more than $25 billion for a TNK-BP stake. VTB Capital, which advised the acquirer, said the three-year agreement will end this year.

The advisory firms have already halted dealmaking together, said people with knowledge of the companies who asked not be identified discussing a private agreement.

“A lot of people misunderstand how profoundly weak Russia is,” Altman, a former deputy U.S. Treasury secretary, said in a Bloomberg Television interview in March. He said Russian President Vladimir Putin may bend to sanctions, which were imposed by U.S. and European Union after the annexation of Crimea last year.

Fewer Deals

Evercore’s 10K filing with the Securities and Exchange Commission for 2014 omitted Russia from a list of nations where the investment bank is pursuing expansion through advisory affiliates and alliances. Other countries identified in the 2013 report -- including Argentina, Brazil, China and India -- were repeated in the more recent document under the heading “Expand In New Geographic Markets.” Australia was added to the passage.

A drop in the price of crude oil, Russia’s biggest export, has exacerbated the impact of international sanctions and high interest rates on the economy, reducing dealmaking. Foreign securities firms have moved staff out of the country and Deutsche Bank AG is considering cutting jobs across its Russia unit, people with knowledge of the plan said last month.

Investment banks in Russia collected $69 million advising on mergers and securities sales through June 25, a 49 percent drop from the same period last year, according to Freeman & Co., a New York consulting firm.

“There is a point at which Russia, at least theoretically, could not function and would have to seek concessions,” Altman said in the interview. “That point could be, for example, a banking collapse and obviously a further currency malfunction. It’s not inconceivable if we were to tighten the sanctions further, and Europe were to agree to sign on to that, that they could actually force Russia to bend.”

Evercore declined to comment, said Dana Gorman, a spokesman for the company at Abernathy MacGregor Group.

“The objectives of the agreement have been fulfilled,” VTB said. “We plan to continue cooperation with Evercore on a non-contractual basis.”

VTB Capital, whose parent was sanctioned by the U.S. and the EU over Russia’s involvement in the Ukraine conflict, set up an office in New York in 2012 and has operations in London, Sofia, Dubai, Hong Kong and Singapore, according to its website.

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