The Russia-based subsidiary of Citicorp has added securities safekeeping to its product offerings.
Citicorp, which offers custody and clearings services in over 50 countries, will install at its Citibank T/O subsidiary in Moscow a securities service system for the dollar-denominated Minfin bonds, named after Russia's Ministry of Finance.
Apparently no other U.S. bank is offering custody services in the Russian securities market. Officials said that Chase Manhattan may be planning similar moves in the near future.
The Citicorp subsidiary's service will give its wholesale customers better access to Russia's nascent and often very speculative capital markets.
"This is a first entry into the custody or securities services product family in Russia," said bank spokesman Michael Williams. "The custody services for equities should be completed sometime in the first quarter of 1995."
Miljenko Horvat, president of the Moscow-based bank, expects an expansion in services and in its customer base as Minfin equivalent of the U.S, Treasury, issued over $7 billion of the Minfins a year and a half ago to reimburse holders of frozen accounts when the government-controlled Vneshekonombank failed shortly after the collapse of the Soviet Union.
The move by Citicorp and others into the Russian market will have a stabilizing effect in a market that is a "wild and woolly place," according to Keith Crane, a research director with Planecon Inc., a Washington-based consulting firm specializing in Eastern Europe and the former Soviet Union.
"A big problem in Russia and all these other markets has been a substantial amount of settlement risk," Mr. Crane said.