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Deutsche Bank Bucks Trend As It Keeps Ties With Russia

EconomyDeutsche Bank Bucks Trend As It Keeps Ties With Russia

London (Times Of Ocean)- The Deutsche bank said it would not withdraw completely from Russia, angering investors and in contrast to Wall Street banks that have severed ties with the country as a result of its invasion of Ukraine.

Banks and asset managers have joined many other Western companies in withdrawing from Russia following a raft of sanctions against the country.

“We are often asked why we are not withdrawing completely from Russia. The answer is that this would go against our values,” Chief Executive Christian Sewing said in a note to Deutsche Bank staff on Thursday.

It would not “be the right thing to do in terms of managing those client relationships and helping them to manage their situation”, he added.

Bill Browder, an investor who campaigns to expose corruption, said that by staying in Russia, Germany’s largest bank is at odds with the international business community and will create backlash, lost reputation, and lost business in the West.

The Russian forces bearing down on Kyiv regrouped northwest of the Ukrainian capital on Friday and Britain said it could now be planning an assault on the city within days.

The Russian government calls its actions in Ukraine a “special operation.”

BlueBay Asset Management senior emerging market sovereign strategist Tim Ash said it was “just not good enough from DB”.

“Perhaps DB needs to take a fresh look at its own ESG (environmental, social, governance) framework,” he said.

In response to the invasion, fund managers are reevaluating their approach to governance.

This week, Goldman Sachs Group Inc (GS.N) and JPMorgan Chase (JPM.N) became the first U.S. banks to suspend business in Russia.

Goldman Sachs, which has a $650 million credit exposure to Russia, said on Thursday it was winding down the business. According to a source familiar with the situation, any losses would be “immaterial.”

Additionally, JPMorgan said it was actively winding down its Russian business and was not seeking new business there.

About 160 JPMorgan employees work in Moscow. In its most recent filings, the bank did not list Russia among the top 20 countries where it has the most exposure.

On Thursday, Marsh (MMC.N) and Aon (AON.N), the world’s two largest insurance brokers, also announced they would cease operations in Russia.

Deutsche Bank (DBKGn.DE) said earlier this week that its credit risk exposure to Russia and Ukraine was 2.9 billion euros ($3.18 billion) and that it had further reduced that exposure over the past two weeks.

Credit Suisse (CSGN.S), UniCredit (CRDI.MI) and BNP Paribas (BNPP.PA) have also disclosed billions of euros’ worth of Russia risk.

“Most European banks are applying the strictest sanctions and even going further, trying to do what is right and what needs to be done,” Ana Botin, president of the European Banking Federation and executive chairman of Santander (SAN.MC), said in an interview with Spain’s El Mundo newspaper published on Friday.

Analysts and investors are concerned that the potential losses among major European lenders will derail their turnaround plans and halt dividend payouts for shareholders, even though the losses are not large enough to threaten their stability.

However, European bank stocks (.SX7E) have been able to claw back some of their sharp losses since the invasion.

 

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