- Deutsche Bank stopped taking on new clients in 109 states
- Cryan is working to avoid repeat of fines plaguing the firm
Deutsche Bank AG co-Chief Executive Officer John Cryan says banks in developed nations face a difficult decision: pull back from dealing with the world’s poorest countries, or else defy regulations that sometimes clash when seeking to both prevent financial crime and customers’ privacy.
Compliance with so-called know-your-client rules mean banks must know about the customers of the correspondent banks they deal with in developing nations, often an impossible task while keeping on the right side of data-protection rules, Cryan said on a panel at the World Economic Forum in Davos, Switzerland on Wednesday.
“We just stopped on-boarding clients in 109 countries which we agreed with our regulators were highest-risk countries,” Cryan said. Instead of breaking laws, banks “exit correspondent banking, and all that leads to is marginalization and social exclusion for the, 109 in our case, riskiest and therefore least developed countries in the world.”
Cryan is working to avoid a repeat of the billions of dollars of fines and legal settlements that have eaten into Deutsche Bank’s capital and helped to make it the worst-valued global bank. Deutsche Bank said in November that it would stop taking on new clients in certain locations that have “higher risk weightings” as the company reviews its procedures. It didn’t specify the number of countries affected.
The company said in October that it would exit 10 countries to reduce costs as well as the bank’s complexity. Deutsche Bank has a presence in more than 70 countries, according to its website.
There are 195 independent states, according to the U.S. State Department’s website.