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Deutsche Bank is getting out of Russia

Sep 18, 2015, 15:37 IST

A Russian bear.Russky Medved via Wikimedia Commons

Deutsche Bank is closing its Russian corporate banking arm in Russia and send its regional chief, Joerg Bongartz, back to Frankfurt.

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The bank said Bongartz's move was "long planned," while the decision to close the corporate banking and securities unit "has been made in order to reduce complexity, costs, risks, and capital consumption," according to a statement on Deutsche Bank's website on Friday.

Bongartz has been in Russia since 2006 and joined the bank in 1982, and he'll have responsibility for Deutsche Bank's Central and Eastern European businesses back at the Frankfurt headquarters.

Beyond the complexity associated with having a big presence in Russia, there are two other good reasons for DB to get out of the country.

Firstly, the bank is reportedly facing money laundering probes from US, UK and German regulators into around $6 billion of trades in Russia.

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And secondly, the Russian economy has been savaged by low oil and and commodity prices and sanctions imposed on deal-making by Western governments in response to Russia's intervention in Ukraine.

New chief executive John Cryan is reviewing the bank's businesses globally and finding unprofitable areas to cut. He called Deutsche Bank's spending on fines and litigation "unacceptably high" back in July so getting out of Russia is a good start.

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