Germany’s biggest bank has announced it would close its onshore corporate banking and securities business in Russia amid a strategy change aimed at reducing complexity, costs, risks and capital consumption.
Deutsche Bank said in a statement released Friday that its Russian Corporate Finance and Markets businesses would now operate from international hubs. The bank would, however, continue to offer prices in Russian securities to clients, using third parties for local execution, as well as banking services to core Russian clients, the statement added.
Germany’s biggest commercial lender didn’t give any specific reason for the move, but added that was part of a review of its global structure that was aimed at reducing “complexity, costs, risks and capital consumption.”
News agency Reuters quoted two people familiar with the bank as saying that 200 jobs in Russia were planned to be slashed as part of the decision. Deutsche Bank has currently about 1,300 staff in the country.
Deutsche Bank is in the midst of a sweeping program to shrink its global footprint to a regional one under new chief executive John Cryan. Official investigations in Europe and the United States into share trades conducted by the bank’s Moscow office have piled added pressure on the bank.
The German lender’s Russian operation expanded rapidly on the back of lucrative financing deals it assembled for clients as the Russian economy enjoyed an oil-fuelled boom. However, deal-making in Russia has slowed because of Western sanctions imposed in response to Russia’s intervention in Ukraine, and because the falling oil price has pulled Russia’s economy towards recession.
The transition and the closure of the onshore corporate banking and securities operations were expected to be “substantially completed by year end 2015,” Deutsche Bank added in the statement.
uhe/tko (Reuters, dpa, Deutsche Bank)