Being faced with several odds in Russia, Deutsche Bank has decided to withdraw some of its services from Russia. The alleged share trading by Russian unit of Deutsche Bank has become subject to investigation in the US. The German bank may stop 90 percent of its banking services in Russia soon.
Deutsche Bank has decided to stop some of its services in Russia following an array of unfavorable conditions for it. The German bank is closing corporate banking services and securities business in Russia. The bank has become a subject to the sanctions in Russia. The investigation into share trading has also irked the bank. Above all, the downturn in the Russian economy has led Deutsche Bank to withdraw some of its services from Russia. Deutsche Bank is expected to announce its optimization plan for Russia operations soon.
As part of its business development program, the Chief Executive of Deutsche Bank John Cryan has decided to withdraw from global operations in Russia. The bank finds it difficult to work under government pressure in the ailing economy. The share trading carried out by Moscow's office of Deutsche Bank has added more pressure on the German bank. Deutsche Bank's Russian unit's operations in US and Europe were subject to the Russian government's official investigation.
Deutsche Bank has declined to react on the latest development. According to a section of media reports, the German bank may close all of its banking services in Russia barring transaction banking services.
Deutsche Bank has already trimmed its headcount in Russia as over one-fourth of employees have been laid off so far. Except global transaction banking (GTB), Deutsche Bank will close down almost 90 percent of its operations in Russia. Joerg Bongartz, the Chairman of Russian operations of Deutsche Bank, will step down and move back to Germany. He was Chairman of Russia operations since 2006. Bongartz will take up the responsibility at Deutsche Bank's Central and Eastern Europe.
The US Department of Justice (DoJ) is investigating into charges of bribing senior staff members, controversial trading in shares by Moscow's unit have forced the Chairman to quit Russia. The US Federal Bureau of Investigation (FBI) is also looking into shares trading.
The possible money laundering by Deutsche Bank's Russian clients was the main reason for the German bank's latest problem. With over 1,000 employees, Deutsche Bank has emerged as one of the major overseas banks in Russia.
With the latest decision to withdraw investment banking division from Russia is likely to see job cuts up to 200 immediately. Analysts feel that there may not be a major impact on bank's revenues following the withdrawal from Russia. Because, Deutsche Bank can take care of its Russian clients from other nations as well.
The statement on the decision to close the banking services in Russia has been posted on bank's Russian site. Going by the date of the statement i.e. 18 September, it was by mistake posted in advance. However, the statement on the website was removed later.
The German bank's official spokesperson in Russia is not available for a comment. It has learned that Deutsche Bank may announce its latest plan on optimization of Russia operations very soon.
Deutsche Bank's expansion into Russian banking sector was very fast as it received major finance deals for its Russian clients. This was more particularly during those days of the oil-fueled boom in Russia.
Sanctions imposed by Western countries on Russia following its intervention in Ukraine have been impacting the economy very badly. Adding to this, the drop in oil price has further pushed Russia into recession.
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