By Douglas Busvine
MOSCOW (Reuters) - Credit Suisse
The news on Wednesday marks a significant, but not complete retreat from a market which Credit Suisse entered in the chaos that followed the break-up of the Soviet Union and did not abandon despite the hit it took in Russia's 1998 financial crash.
The Zurich-based bank will also move its Moscow-based debt and equity capital markets business to London, venue of major recent Russian share offerings by Sberbank
Credit Suisse was involved in both deals, propelling it to the top spot in the year to date in Russian equity deals, according to Thomson Reuters rankings. It placed 12th in debt deals and sixth overall in Russia.
Switzerland's dominant banks have come under massive regulatory pressure to cut risk and shrink balance sheets, while Russian state rivals Sberbank and VTB
The move responds to a flow of liquidity away from Moscow which - despite the Kremlin's efforts to transform the Russian capital into a global financial center - has failed to attract major deals.
Capital is leaving Russia at an annual rate of $80 billion, reflecting concern about corruption, the weak rule of law and the state-capitalist agenda pursued by President Vladimir Putin since his return to power in May.
The CEO of Credit Suisse's Russian unit, Steven Hellman, and Chairman Diana Gindin will stay on in Moscow to oversee trading in fixed income and equities, and private banking. They will continue to coordinate relationships with investment banking clients on the ground.
A "handful" of roles will be affected as some senior bankers relocate to London, the source added.
In a statement issued to Reuters, Credit Suisse said: "We continue to be proactive about monitoring the size of our business relative to client opportunities and market conditions.
"This involves realigning resources to growth areas and adjusting capacity to meet client needs and to manage costs across the business. Credit Suisse remains committed to its clients in Russia."
As part of a major efficiency drive, Credit Suisse expects to achieve cost reductions in its 2013 financial year of more than 3 billion Swiss francs ($3.24 billion), rising to 4 billion a year in 2014-15.
Credit Suisse was an early adviser on Russia's post-communist privatizations but its then investment banking arm, Credit Suisse First Boston, took losses of $1.3 billion when Russia defaulted on its domestic debts and devalued the rouble in 1998.
CSFB cut its Russia head count by a third after the crash, but the Swiss bank went on to expand its presence in the boom that followed Putin's rise to the presidency in 2000.
Foreign banks have found it increasingly difficult to compete against Russia's state banks, which enjoy a funding advantage and implicit guarantee from a sovereign that itself has a strong balance sheet.
Pioneer Stephen Jennings, who came to Moscow with Credit Suisse in 1992, recently sold out of the Russia-focused investment bank he later founded, Renaissance Capital, after saying that investment banking is one of the worst businesses to be in.
(Additional reporting by Megan Davies; Editing by Mike Nesbit and Greg Mahlich)