Germany's Deutsche Bank AG said Friday that it would shut down its investment banking operations in Russia, as part of the new co-CEO John Cryan’s plan to pull the banking giant out of some countries amid criminal probes and lawsuits.
About 200 jobs would be affected due to the move, sources told Bloomberg. However, about 200 people in transaction banking and another 900 in IT functions who work in Russia are expected to stay in place, the report added.
Deutsche Bank said in a statement that it has taken the decision to “reduce complexity, costs, risks and capital consumption.”
The move comes at a time when the bank is under investigation from regulators in both the U.S. and European countries. Investigators are looking into allegations of money laundering by the bank's Russian clients, and conducting probes into its compliance systems.
Deutsche Bank said in July that it was reviewing stock trades by anonymous clients through its Moscow and London offices, which reportedly involved securities exchanges worth billions of dollars.
The bank was also slapped with a $2.5 billion fine in April, the most severe punishment for interest-rate benchmark manipulation in history. The lender was found to have manipulated Libor, London’s benchmark for interbank borrowing, in London, Tokyo, New York and Frankfurt.
The company is also set to slash about one quarter of its total staff, or about 23,000 jobs, through layoffs in its technology activities and spinning off its PostBank division, according to reports, citing sources.
“Deutsche Bank has to decide what it wants to do and whether it wants to be in countries that have this kind of cultural risk of money laundering,” analyst Dirk Becker from Kepler Cheuvreux told Bloomberg. “The profits just don’t justify the kind of risk that they’re exposed to.”
Germany’s biggest lender said in May that it would shut operations in as many as 10 countries, as part of a plan to reduce its adjusted costs by about 15 percent by 2020. Cryan, who took over from previous co-CEO Anshu Jain in July, has said that he will slash costs and slim down trade operations.
Other banks are also cutting operations in Russia. France’s BNP Paribas SA pulled out its fund-management venture in the country, Austria’s Raiffeisen Bank International AG sold off its pension funds business and German reinsurer Munich Re shuttered its Moscow office.