It was not only US investment banks such as Lehman Brothers and Merrill Lynch that found themselves in dire trouble in September. In the middle of the month, Russia’s KIT Finance found itself unable to meet repo obligations and had to hurriedly find a strategic buyer to prevent itself following Lehman’s fate. According to market sources, KIT Finance failed to settle repo obligations worth about Rb6 billion to Rb8 billion ($153 million to $230 million) In the end the company was rescued by Leader Asset Management, the pension fund arm of Russian energy company Gazprom.
KIT had expanded rapidly in recent years and boasted over 50 offices in Russia and eastern Europe. It was widely seen as trying to break into the top tier of Russian investment banking, led by Renaissance Capital and Troika Dialog. In February it opened an office in London and had been hoping to launch an initial public offering and raise $1 billion from listings in Moscow and London. But market conditions conspired against those plans and a number of KIT’s clients got into trouble. Most notably, a Russia property developer defaulted on a loan, wiping out the bank’s first-half profits at a stroke.