In the first direct investment by a U.S. bank in Russia since the Soviet Union broke up, Chemical Banking Corp. has joined Russian investors and three other U.S. financial firms in setting up a Moscow-based investment bank.

Chemical and its U.S. partners - American International Group Inc., Smith Barney, Harris Upham & Co., and Rothschild, Wolfensohn & Co. - will contribute half the bank's approximately $10 million in capital. American International, better known as AIG, will contribute $2 million and the other three $1 million each.

Government Approval Granted

Ten Russian shareholders including banks, pension funds, and regional governments will contribute the remaining 50%.

The bank, to be known as the Russian-American Investment Bank, has been approved by the Russian government and is expected to being operations before the end of the year.

Authorization includes the right to repatriate the bank's profits in hard currency.

The bank aims to provide financial advisory services for corporate restructurings and project finance.

It will emphasize advising on the development of natural resources and the conversion of military industries to civilian production.

A Chemical spokesman in New York emphasized that the bank will not engage in any lending.

He added that Chemical hopes to use the bank as vehicle for providing U.S. corporate customers with advice and services relating to Russia.

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