Deutsche Bank ends in Russia, reverses course after backlash

FRANKFURT, March 11 (Reuters) – Deutsche Bank (DBKGn.DE)Which has faced harsh criticism from some investors and politicians for its continuing ties with Russia, said on Friday in a surprise move that it would end its business in the country.

Deutsche joins Goldman Sachs (GS.N) JP Morgan Chase (JPM.N)It was the first major US bank to leave after Moscow’s invasion of Ukraine. These moves put pressure on competitors to follow. Read more.

Deutsche has resisted pressure to cut ties, arguing that it needs the support of multinational companies doing business in Russia.

But on Friday evening in Frankfurt, the bank suddenly reversed course.

“We are in the process of winding down our remaining business in Russia while helping our non-Russian multinational clients reduce their operations,” the bank said.

“There will be no new business in Russia,” Deutsche said.

The day before, Deutsche Bank CEO Christian Swing explained to employees why the bank had not withdrawn.

“The answer is that this goes against our values,” he wrote. “We have clients who can’t get out of Russia overnight.”

Bill Browder, an investor who has spent years campaigning to expose corruption in Russia, said Deutsche Bank’s survival was “totally at odds with the international business community and would lead to a backlash, losing its reputation and business in the West”.

“I would be surprised if they can maintain this position as the situation in Ukraine continues to deteriorate,” Browder told Reuters earlier on Friday.

The criticism came as Russian forces pressing Kyiv were regrouping northwest of the Ukrainian capital and Britain said Moscow could now plan an attack on the city within days. Read more

Fabio de Masi, a former member of the Bundestag and a prominent activist against financial crime, said Deutsche Bank has close ties to the Russian elite, many of whom have faced sanctions, and that the relationship, as it involves Russian criminal activity, must end. .

‘watching’

Deutsche Bank said it has reduced its presence in Russia in recent years. This week it revealed 2.9 billion euros in credit risk to the country, and said exposure was “very limited”. Read more

It also operates a technology center with about 1,500 employees in Russia and opened a new head office in Moscow in December, which it said at the time represented a “significant investment and commitment to the Russian market.”

Russia has pushed Deutsche Bank in hot water in the past.

The US Department of Justice has been investigating the matter for years over the course of transactions that authorities said were used to launder $10 billion from Russia, which resulted in the German bank being fined nearly $700 million.

Deutsche Bank said on Friday that the Justice Department’s investigation was “ongoing”.

The row over Russia came when Deutsche Bank disclosed in its annual report that it paid the sewing company 8.8 million euros ($9.68 million) in 2021, a 20% increase from the previous year.

Overall, the lender paid 14% more, or 2.1 billion euros, in bonuses for 2021, rewarding employees for the bank’s most profitable year in a decade.

(1 dollar = 0.9088 euros)

Additional reporting by Tom Sims, John O’Donnell and Frank Sebelt; Additional reporting by Caroline Cohn; Editing by Miranda Murray, Jason Neely, Alexander Smith and Chizu Nomiyama

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