At the end of 2016, the Russian office of Deutsche Bank had a new wave of staff cuts, as two sources in the banking market told RBC. "It mainly affected investment departments and back-office. Only about 200 people have been fored since the autumn of 2015," said one of the interlocutors. A person close to Deutsche Bank added that layoffs also affected the depositary. "It was the realization of planned decisions, which the bank announced over a year ago," said the financier.
"Optimization in Russia goes according to the plan. The bank focused on providing global services for corporate customers," the press service of the Deutsche Bank. The official representative of the bank also said that the Russian division currently employed about 1.2 thousand workers. These are mainly IT-specialists in a technological center that handle the global business of the bank, there are about a thousand people, said a former top manager of the bank.
"Divisions working on the global capital markets and investment banking department moved to London a year ago; in fact, there are only technicians and account managers left in Russia," says one of the former employees of Deutsche Bank.
Deutsche Bank spokesman confirmed that, according to plans, operations on the global capital markets and services for issuers and institutional clients in Russia are provided by the bank from its western offices. Asset management services to wealthy clients are also concentrated abroad. Corporate banking, including trade finance, cash management, working capital and foreign exchange operations, will stay in Russia, according to a representative of Deutsche Bank who spoke to RBC.
Layoffs in the Russian office of Deutsche Bank began after the bank announced in 2015 that it would curtail investment banking business in Russia. In September 2015, Joerg Bongartz quitted his position as CEO of Deutche Bank; he had worked in this position for nine years.
Last summer, it became known that Pavel Teplukhin would leave the post of chief executive director of the bank, and several employees would be transferred to Deutsche Bank P.S.Capital, controlled by brothers Alexey and Dmitry Ananyev. In particular, as the Vedomosti wrote, seven managers of Deutsche Bank had been transferred there, including Maxim Lozhevsky, who had been the head of the Department of Trading in Deutsche Bank since 2015, and Roman Sulzhik, the head of the Department on Trading Futures Financial Tools in the Moscow office of Deutche Bank. Member of the Board of Directors of Promsvyazbank, Vladislav Khokhlov, confirmed to RBC that they were currently working in P.S.Capital.
Top-manager of the US investment bank said that there had been selective layoffs in the majority of foreign banks in Russia, but in contrast to the crisis in 2014, they were not large scale. "It is rather a consequence of the global policy of banks to reduce costs. This usually happens after a crisis, but with a certain delay," says chief investment officer at Prosperity Capital Management, Alexander Branis.
Deutsche Bank announced the optimization of the Russian division of investment banking services within the framework of the revision of the geography of its presence. "This decision was taken in order to streamline processes, minimize costs and risks, and the efficient use of capital," it said in a statement. Part of its business the bank planned to transfer to the offices in Frankfurt and London. According to RBC's source close to the bank's head office in Frankfurt am Main, the decision to close the investment business in Russia was due to sanctions and poor control system in the Moscow office. As noted by Bloomberg, an internal check in the bank established a "systemic" failure in the internal control procedures designed to prevent money laundering.
In the spring of 2015, some media published information that the bank had launched an internal investigation in connection with the identified doubtful operations with derivatives in London. Thanks to the so-called mirror transactions with shares, the bank's customers had managed to withdraw $10 billion from Russia. In December 2015, the Bank of Russia fined LLC Deutsche Bank for 300 thousand rubles for violation of the rules of internal control, made by the Moscow office. The European and US regulators also made their investigations of transactions of Deutche Bank. Against the background of scandals, several employees of Deutsche Bank, including the head of the Department of Shares Trade, Tim Wiswell, were fired.
The latest scandal around the Russian subsidiary of Deutsche Bank has been associated with the manipulation of shares in major companies in 2013-2015, which was revealed by the investigation of the Bank of Russia. Transactions were made by a former employee of Deutsche Bank, Yuri Khilov, which, together with the participants of the scheme, received income from the manipulation amounting to 255 million rubles. As the investigation found out, the trader made transactions with his relatives, who had opened accounts in major broker companies. Khilov's relatives acquired shares, using broker's borrowed money, and then Khilov bought them at a bargain price on behalf of Deutsche Bank. Then, on behalf of a physical person, an application for repurchase of shares was made, which was also satisfied by the Deutsche Bank. In particular, the Bank provided a comfortable level of prices for the shares for a few minutes necessary to commit a transaction.
Over the last years Deutsche Bank has faced serious financial and legal problems. At the end of 2015, the bank the first time since 2008, had a loss of $6.8 billion, mainly because of high costs and falling revenues from investment business. To improve the situation, the bank adopted a program of global business restructuring, which aimed to reduce the number of offices around the world. In October 2015, the bank reported that in the framework of its "2020 Strategy" it was going to fire 9,000 employees and withdraw from ten countries. In general, the layoffs would affect 35 thousand employees.