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March 10, 2022updated 23 Mar 2022 1:14pm

Deutsche Bank reports ‘very limited’ exposure to Russia, Ukraine

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Deutsche Bank has reported ‘limited and substantially mitigated’ risk exposures to Russia and Ukraine amid the ongoing military conflict in Ukraine.

The German lender said that credit exposures to both countries make up for a very small portion of its overall loan portfolio and are protected by a number of risk mitigants.

As of 31 December 2021, Deutsche’s net loan exposure to Russia stood at €0.6bn after taking account of guarantees and asset collateral.

Its gross loan exposure was €1.4bn, about 0.3% of the overall loan book.

The bank’s net loan exposure to Ukraine was €42m at the end of December.

Deutsche said that it adequately collateralised offshore loans to counterparties linked to Russia by its wealth management division. The collateral is not linked to Russia, it added.

Deutsche Bank chief risk officer Stuart Lewis said: “Our direct exposures are currently very limited and tightly managed. Second- and third-order effects of the current situation, including sanctions and cybersecurity risk, are being carefully evaluated and monitored.”

The bank, which has been cutting down Russian exposure and footprint since 2014, said it made further reductions in the past two weeks.

Deutsche Bank also said the risk arising from the potential closure of its technology centre in Russia is also well contained.

The bank’s Russian Technology Centre, which has 1,500 staff, makes up about 5% of its internal and external technology workforce.

According to the bank, the closure would lead to ‘no significant’ business continuity risk to the functioning of its global operations.

Furthermore, index provider Morningstar announced plans to take out Russian securities from its fixed income indexes starting the end of this month, according to a report by Reuters.

The firm also plans to immediately move the country from emerging markets to unclassified.

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