TO MANY OBSERVERS, investment prospects in Russia have taken a turn for the worse. The stock market has declined by 9 percent over the past year, companies have postponed a raft of IPOs, oligarchs have been sending money out of the country at a prodigious rate, and antigovernment protests have drawn tens of thousands of people into the streets, an unprecedented sign of instability in the Vladimir Putin era. To Todd Berman, though, Russia is the land of opportunity. Berman is the freshly minted chief of investment banking at Troika Dialog, a Moscow-based firm that was acquired in January by giant, state-owned lender Sberbank. Berman believes Troika’s market skills, combined with Sberbank’s deep pockets and corporate lending relationships, can create a national champion. Troika is hiring aggressively in a bid to fulfill that goal. “The investment banking sector here can grow rapidly for the next ten or 20 years while New York and London are shrinking,” Berman tells Institutional Investor during an interview at Troika’s headquarters, one block from the Kremlin. Berman and his colleagues have their sights set on crosstown rival VTB Capital, an arm of the country’s No. 2 lender, state-controlled VTB Bank. Operating with the implicit backing of the government, the bank built Russia’s leading investment banking franchise from scratch over the past four years by exploiting its corporate relationships and wielding a big checkbook to raid foreign houses for talent. Now Moscow bankers expect Sberbank to attempt a similar feat with Troika, which it bought....

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