Deutsche Bank which faced stinging criticism from some investors and politicians for its ongoing ties to Russia, said that it would wind down its business in the country. Deutsche joins the ranks of Goldman Sachs and JPMorgan Chase, which were the first major U.S. banks to exit after Moscow’s invasion of Ukraine. Those moves put pressure on rivals to follow.
Deutsche had resisted pressure to sever ties. By this they argued that it needed to support multinational firms doing business in Russia. In Frankfurt, the bank suddenly reversed course. The bank said that they are in the process of winding down their remaining business in Russia while they help their non-Russian multinational clients in reducing their operations. There won’t be any new business in Russia.
Deutsche Bank’s Chief Executive Christian Sewing explained to staff why the bank was not withdrawing. He stated that the answer is that this would go against their values. They have clients who cannot exit Russia overnight. Bill Browder, an investor who has spent years campaigning to expose corruption in Russia, said that Deutsche Bank staying was completely at odds with the international business community and will create backlash, lost reputation and business in the West.
Browder said that he would be surprised if they are able to maintain this position as the situation in Ukraine continues to deteriorate. The criticism came as Russian forces bearing down on Kyiv were regrouping northwest of the Ukrainian capital and Britain said that Moscow could now be planning an assault on the city within days. Fabio De Masi, a former member of the Bundestag and a prominent campaigner against financial crime, said that Deutsche Bank had close ties to the Russian elite, many of whom faced sanctions and that the relationship, where it involved criminal Russian activity, had to end.
Deutsche Bank has said that it has pared down its Russian footprint and, in this week, it disclosed 2.9 billion euros in credit risk to the country, and said exposure is very limited. It also operates a technology centre with about 1,500 employees in Russia. They also opened a new main office in Moscow in December, which is a significant investment and commitment to the Russian market.
The U.S. Department of Justice has been investigating it for years over trades that authorities said were used to launder $10 billion out of Russia. This led to the German bank being fined nearly $700 million. Deutsche Bank said that the DOJ probe is understood to be ongoing. The row over Russia came as Deutsche Bank disclosed in its annual report that it paid Sewing 8.8 million euros ($9.68 million) in 2021. Overall, the lender paid 14% more, or 2.1 billion euros, in bonuses for 2021, rewarding staff for the bank’s most profitable year in a decade.