* Russia's rich still on sidelines of equity market
* Peak investment years coincided with boom in IPOs, M&A
* Continued rally would renew IPOs, spark new investment
By Melissa Akin
MOSCOW, Sept 16 (Reuters) - Russia's rich, licking their wounds nearly a year after the financial crisis hit the country, remain reluctant to pour their money back into equity markets, the head of private banking at Credit Suisse in Moscow said.
"Individuals as a group typically are late to a rally," said Alexis Rodzianko, a Russian investment banker who turned his hand to asset management at the Swiss bank three years ago.
"One of the reasons we are positive on the rally is that there is so much money on the sidelines," Rodzianko told the Reuters Russian Investment Summit.
Rodzianko launched Deutsche Bank's private banking business in Russia and presided over its takeover of a homegrown investment bank. He left when that acquisition was completed in 2006 to launch private banking at Credit Suisse.
But many of his investors have yet to recover from the blow of September 2008, when asset values started to plummet and margin calls began to rain down, slashing their wealth.
"The wealth of Russians was badly hit in cases where they bought with borrowed funds," Rodzianko said. "If they did not borrow funds it was less hard hit."
Many of the latter, he said, were conservative about their money to begin with, investing locally to build their nest egg.
Private banking boomed in Russia in 2007, Rodzianko said, the year after the government allowed its citizens to freely invest abroad.
That coincided with the peak of Russia's boom in initial public offerings, a type of "liquidity or wealth-creating event", in Credit Suisse parlance, that has ceased since the crisis.
Rodzianko said enough new money came in to keep his net inflows positive through the crisis, when investors sought refuge in foreign assets as the economy weakened and oil prices fell, pressuring the rouble.
"When times are tough the government tends to take things away. That might be the response of a wealthy individual," said Rodzianko, an American-born descendent of the last speaker of the tsarist-era Russian parliament.
Russian investment should pick up, he said, when faith in a stock market rally is consolidated and money starts flowing back into the pockets of the rich through asset sales.
"As the equity market rallies, it approaches the price at which owners are willing to raise capital or sell shares," he said. "There could be restructuring type sales, trade sales... some of that money ends up in the pocket of owners... but if the recovery is very quick we might pass through it so quickly that no one will have time to do anything."