Wall Street and the European banks are losing out in a remarkable rebound for Russian deal making, which has resulted in an almost doubling of fees during the first six months of this year.

Revenues earned by investment banks in Russia from mergers, bonds, and equity deals in the first half of this year surged 87 percent to USD159 million from USD85 million from the same period a year ago, according to the data provided by Freeman & Co, a New York-based consulting firm.

However, an analysis of the data showed that some U.S. and European banks had been virtually locked out of the revival of Russia’s capital markets due to sanctions and their fear of incurring the wrath of U.S. regulators. Indeed, Russia stalwarts Morgan Stanley and Credit Suisse didn’t earn a signal dime in the first six months from the deals, according to the data. Goldman Sachs, the most profitable investment bank on the planet, earned just USD1 million for its trouble, while Deutsche Bank, which shuttered its own operation in Moscow, also collected a miserly USD1 million.

“While the overall fee pool seems to have stabilized, there’s no real sign of improvement in U.S. or European banks’ competitive positioning,” Jeffrey Nassof, a vice-president at Freeman said.

The big winners were the state-controlled Russian lenders Sberbank CIB and Gazprombank. Sberbank CIB, whose parent is run by former Economy Minister Herman Gref, recorded a 450-percent surge in fees to USD33 million from USD6 million. Gazprombank saw its revenue from deals jump by 367 percent to USD28 million from USD6 million.

VTB Capital, which has dominated the league tables for the past eight years, posted a surprising threefold decline in fees to USD9 million from USD27 million. The state-controlled lender, which is run by former Soviet diplomat Andrey Kostin, was the sole organizer of the Kremlin’s controversial USD1.75-billion Eurobond sale in May 2016.

Despite all the hoopla generated by the deal, the fees paid out to VTB Capital were low. Based on regulatory filings, Freeman & Co’s Nassof said fees to VTB look to have been only about USD875,000.

VTB was forced to organize the sale without any help from international underwriters after the U.S. and the E.U. thwarted Russia’s attempt to hire banks including Goldman Sachs Group and Deutsche Bank to manage the issue. The U.S. Treasury Department also put pressure on large bond investors not to participate.

Banks head for the door

Deal making in Russia last year hit its lowest level since 2001. Sanctions and a collapse in the price of crude oil, the nation’s biggest export revenue earner, exacerbated the impact of the economic slump, further slowing deal making.

British lenders Barclays and Royal Bank of Scotland have already cut and run. Jefferies had become the first Wall Street bank to shutter its Moscow operation.

A senior Russia-focused banker expects Bank of America Merrill Lynch and Credit Suisse to be the next major banks to quit Russia. “Unless you have a long-term horizon, I can’t see Bank of America sticking it out, and Credit Suisse could fold too, despite their long history here,” he said.

A trading scandal at Deutsche Bank in Moscow led to the closure of its investment bank in September 2015 and the loss of at least 200 jobs. Investigators from the U.S. and European regulators are looking at the bank’s use of so-called mirror-trading involving about USD6 billion of transactions over four years. The total sum of suspect transactions funded by the bank could be as much as USD10 billion, according to latest unconfirmed reports.

Investment banks are yet to get excited about the Kremlin’s efforts to resuscitate its much-maligned RUB1 trillion (USD20 billion) privatization program. The sale of state assets has stalled in the past three years, as the government sought to sell companies at unrealistic prices.

A lowly Italian bank Intesa Sanpaolo was chosen in May as an investment consultant for the planned privatization of a Russian government stake, but most of the roles in the asset sales in companies like Alrosa, Basheft, and VTB are expected to be awarded to Russian banks.

The Finance Ministry hopes that the privatization this year of a 19.5-percent stake in oil giant Rosneft could help bring 550 billion roubles (USD8.6 billion) to plug the budget deficit, although Rosneft’s CEO Igor Sechin has dampened expectations of any sale.

East is Russia’s new West

Data from Freeman indicates that President Vladimir Putin’s much-vaunted pivot to Asia is beginning to pay dividends. Putin is keen to show that sanctions haven’t left Russia isolated by developing financial, military, and diplomatic ties with China, as well as Japan.

Fees earned by banks from Asia climbed to USD20 million during the first half of the year from just USD1 million a year ago. Much of that is the result of a USD12-billion monster loan deal provided to Novatek’s Yamal LNG project by the Export-Import Bank of China and the China Development Bank.

“The Yamal LNG project loans were by far the largest fee events of 2016, which went to local and Chinese banks,” said Nassof.

The future of the project had been in danger due to the lack of access to Western capital markets, as well as plunging oil prices. The key question for Russian capital markets is whether Yamal represents a one-off for Chinese financing or if it will eventually lead to a wall of money funding future deals.

While Russian capital market activity – especially in bonds and syndicated loans – is showing signs of a revival, it remains way below the levels of three years ago. In the first half of 2013, investment banks earned a whopping USD488 million from deals in Russia. Since then, the ranks of investment banks in Moscow have been decimated, Bloomberg terminals have been ripped out, and investors have run for the hills.

To return to those dizzy heights, the Russian market needs higher commodity prices, a relaxation of sanctions, improved corporate governance, and the development of a long-term local investor base.