Jason Corcoran in Moscow -
Deutsche Bank was forced to shut down its investment banking division in Moscow after the Central Bank of Russia (CBR) threatened to revoke its main banking license following a storm over alleged money laundering by the German lender, banking insiders claim.
Only the intervention by a senior German politician, believed to be Minister of Finance Wolfgang Schaueble, and a promise to wind down the onshore Corporate Banking & Securities Business averted that course of action, according to a senior Moscow banker familiar with the central bank's dealings.
"Deutsche has quite nicely stage-managed their exit from [investment banking in Russia]," the banker told bne IntelliNews. "It could have been much worse and the reality is that they were forced out."
Neither the central bank press department nor Ksenia Muratova, an adviser to CBR governor Elvira Nabiullina, responded to emails seeking comment.
In an e-mailed reaction following publication by bne IntelliNews, Deutsche Bank said: "All facts in the story are untrue."
Under Nabiullina's helm, the regulator is accelerating its campaign of shuttering banks as Russia works to tackle illicit activities such as money laundering, risky lending practises, and the financing of terror and drug-related activities – the main drivers behind the estimated net capital outflows of $55bn so far this year.
Deutsche Bank, a lender whose ties with Russia span 134 years, announced on September 18 that it was closing its Moscow Corporate Banking & Securities Business by the end of year following allegations that its bankers laundered money on behalf of its clients
The decision was taken "in order to reduce complexity, costs, risks, and capital consumption", according to a statement published on the bank's website. The German bank, which has had the biggest and most profitable investment banking business in Moscow over the past two decades, said it will continue to offer prices in Russian securities to clients, but using third parties for local execution.
Tim Wiswell, a senior American employee until August, is at the centre of a probe into possible money laundering involving about $6bn of transactions over more than four years. Regulators and the bank itself are examining so-called "mirror-trades" whereby Russian clients might have bought stocks in rubles via Deutsche Bank, and simultaneously made trades through London in which the bank purchased the same stocks at similar amounts in US dollars. Such transactions could have enabled Russians to move money offshore without telling the authorities.
The head of a Moscow investment bank told bne IntelliNews on September 24 that another foreign lender was involved in the mirror trading and had contained it by sacking the banker responsible and ending the client relationship.
Deutsche Bank is not the only foreign bank to shut up shop or reduce its presence in Russia in recent years and won't be the last. Credit Suisse has moved part of its investment banking business from Moscow to London to cut costs after losing market share to Russian state banks. Both ING and UniCredit shuttered their equities units in 2013 too in the face of plunging client flows.
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