John Cryan’s reorganization of Deutsche Bank is gathering steam. The new chief executive of Germany’s largest bank plans to shut down most of its business operations in Russia, where the bank is embroiled in a major new scandal.
Deutsche Bank itself and a number of national banking authorities, including the U.S. Department of Justice, are investigating accusations that staff members helped customers to launder money between Moscow and London.
The investigation could prove extremely costly, and it seems some consequences have already been drawn. The bank plans to cut ties with 90 percent of its investment banking customers in the country, Handelsblatt has learned. These include banking clients with which the bank has had long-standing business ties. It is unclear what will happen with the remaining customers.
The partial withdrawal from Russia hasn’t yet been formally decided though, the sources said. Deutsche Bank’s smaller dealings in asset management and with business loans in the country will reportedly remain intact.
Deutsche Bank declined to comment. It reiterated that Mr. Cryan, who became co-chief executive in July, will announce details of the new strategy at the end of October. The Reuters news agency has also reported about the partial pullout from Russia.
The latest development comes as the bank is refocusing its operations on what is most profitable, moving away from global banking to concentrate on investment banking in the regions of Asia, North America and Europe.
A more dramatic pullout of retail banking is also underway, with plans to withdraw from Denmark, Finland, Malta, New Zealand, Norway and Peru. The bank also plans to sell its stake in Chinese bank Hua-Xia and to pull out of retail banking in India, while spinning off its domestic retail subsidiary Postbank and cutting about 200 branches in Germany.
Thousands of job cuts could be in the offing as a result – and the vast majority of them outside Germany – though sources said that nothing has been formally decided.
The fear at Frankfurt’s headquarters in Frankfurt, however, was palpable on Tuesday: “There were many discussions, but nobody knows what’s happening,” said one member of the bank’s worker’s council.
A restructuring of the bank’s operations had already been announced in April by Mr. Cryan’s predecessors, Anshu Jain and Jürgen Fitschen, though the lack of detail at the time frustrated investors who demanded a more aggressive plan from the bank to restore profits that have lagged behind rivals since the 2008 crisis.
On taking office in July, Mr. Cryan said he would take his time to carefully review the bank’s business operations in terms of profitability, market development, the regulatory environment and customer relevance.