Deutsche Bank Reproached For Staying In Russia While Others Left

Deutsche Bank headquarters in Frankfurt, Germany on September 21, 2020. REUTERS/Ralph Orlowski

Deutsche CEO says it will serve international customers in Russia
Deutsche CEO says departure ‘contradicts our values’
Investors criticize Deutsche presence in Russia
Deutsche Bank said it is monitoring the situation, can adapt
CEO salary increased by 20% in 2021

FRANKFURT, March 11 – Deutsche Bank (DBKGn.DE) faced harsh criticism from some investors and politicians on Friday for its continued ties to Russia after it said leaving would be contrary to its values as other banks cut ties with the country. .

Germany’s largest bank has resisted pressure to sever ties following the Russian invasion of Ukraine, arguing it needs to support multinational firms doing business in Russia.

Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N) said Thursday they are winding down their Russian businesses, becoming the first major US banks to exit the market since Moscow’s invasion of Ukraine, and putting pressure on competitors to follow. . More ,

“We are often asked why we do not leave Russia completely. The answer is that it goes against our values,” CEO Christian Scheuing said Thursday in a note to employees of Deutsche Bank (DBKGn.DE).

“We have clients who cannot leave Russia overnight.”

Bill Browder, an investor who spent years campaigning to expose corruption in Russia, said Deutsche Bank’s stay was “completely at odds with the international business community and will cause backlash, loss of reputation and business in the West.”

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

The criticism came as Russian forces approaching Kiev were regrouping northwest of the Ukrainian capital, with Britain saying Moscow could now plan an assault on the city within days. More

Fabio De Masi, a former member of the Bundestag and a prominent financial crime fighter, said that Deutsche Bank had close ties to the Russian elite, many of which faced sanctions, and that those relationships, where they involved Russian criminal activities, must be terminated. .

“MONITORING”

Deutsche Bank said it had reduced its presence in Russia in recent years but disclosed a €2.9 billion credit risk to the country this week. More

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

Asked about criticism of its decision to stay, Deutsche Bank reiterated its statement that it would comply with the sanctions and that it was “monitoring the situation closely”, adding that it could adapt its approach “if necessary”.

Tim Ash, Senior Emerging Markets Sovereign Strategist at BlueBay Asset Management, said: “It’s just not good enough from DB.”

“Perhaps DB (Deutsche Bank) needs to take a fresh look at its own ESG concept,” he said, referring to environmental, social and governance investment criteria.

In the past, Deutsche Bank got into trouble in Russia.

The US Department of Justice has been investigating deals for years that authorities say were used to launder $10 billion from Russia, resulting in a German bank being fined nearly $700 million.

On Friday, Deutsche Bank said the Justice Department’s investigation was “understood to be ongoing.”

The Russia scandal came after Deutsche Bank said in its annual report that it paid Sewing 8.8 million euros ($9.68 million) in 2021, up 20% from a year earlier.

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

($1 = €0.9088)

Reporting by Tom Sims, John O’Donnell and Frank Siebelt; additional report by Caroline Cohn; Editing by Miranda Murray, Jason Neely and Alexander Smith

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