The banks have signed a memorandum of understanding that will see them mainly collaborate on cross-border M&A and investment activity between China and Russia. But the agreement also includes capital markets, asset management, private equity, research and FX activities.
"The political relationship between Russia and China is getting closer all the time, with trade flows between the two countries doubling every five years and FDI set to grow," said Damian Chunilal, CEO Asia at VTB Capital. "We think this deal is a real game changer."
China and Russia have set a target for trade between the two countries to reach $100bn by 2015 and $200bn by 2020. In 2012, bilateral trade stood at $88.2bn.
While the MoU covers deals from China into Russia and vice versa, Chunilal believes most of the deals flow will be one way.
“We think more FDI will be from Asia into Russia. This will be driven from China and from our conversations with Chinese SOEs we know they have a great interest in Russia and the wider CIS region,” he said.
VTB has ambitious plans to grow in Asia and last February hired Chunilal to build its franchise in the region.
Fixed income is one area of focus for the bank, which has hired a trio of credit traders in the past 12 months.
In September it hired Daren Wong as head of Asia high yield trading from Bank of China. He was followed in December by Lewis Wong, who joined as head of Asia illiquid credit trading from Credit Suisse. Most recently Bryan Ko became head of investment grade credit trading.