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Deutsche Bank Decides To Continue Business In Russia Bucking The Trend

Deutsche Bank Decides To Continue Business In Russia Bucking The Trend
Investors were outraged when Deutsche Bank announced it was not totally withdrawing from Russia, contrasting with Wall Street institutions that are cutting relations with the nation over its invasion of Ukraine.
Following a slew of sanctions on Russia, banks and asset managers have followed many other Western firms in pulling out.
"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.
According to Bill Browder, an anti-corruption activist, Germany's largest bank "is absolutely at odds with the international business community and will produce backlash, lost reputation, and business in the West" by remaining in Russia.
Russian military advancing on Kyiv regrouped northwest of the Ukrainian capital on Friday, according to satellite images, and Britain claimed Moscow might be launching an assault on the city in days.
Russia's invasion of Ukraine has been described by Moscow as a "special operation."
"Just not good enough from DB," said Tim Ash, senior developing market sovereign strategist at BlueBay Asset Management.
"Perhaps DB needs to take a fresh look at its own ESG (environmental, social, governance) framework," he said.
The invasion of Ukraine has prompted fund managers to rethink their governance strategies. This week, Goldman Sachs Group Inc and JPMorgan Chase became the first American banks to stop operations in Russia.
Goldman Sachs, which has a $650 million credit exposure to Russia, announced on Thursday that it was shutting down its operations there. According to a source familiar with the matter, any losses would be "insignificant."
It was "actively unwinding Russian business" and was not pursuing any new business there, JPMorgan also said.  
In Moscow, JPMorgan employs roughly 160 employees. In its most recent disclosures, the bank does not name Russia among the top 20 nations to which it has the largest exposure.
Marsh and Aon, two of the world's largest insurance brokers, announced on Thursday that they were ceasing business in Russia.
Deutsche Bank reported earlier this week that its credit risk exposure to Russia and Ukraine was 2.9 billion euros ($3.18 billion), down from 2.9 billion euros two weeks ago.
Credit Suisse, UniCredit of Italy, and BNP Paribas of France have also declared billions of euros in 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.
While the possible losses among major European bankers are not large enough to jeopardise their viability, experts and investors are concerned that they might derail recovery efforts and put a stop to dividend payments to shareholders. find out more
However, European financial stocks have gotten a breather this week, recouping some of their steep losses since the invasion.

Christopher J. Mitchell

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