Deutsche Bank Stops Taking On Some Clients During Reviewby
Bank will suspend new products in some riskier locations
Firm to complete procedures before working with new customers
Deutsche Bank AG said the management board will review its procedures for bringing on new customers as co-Chief Executive Officer John Cryan seeks to tighten controls and avoid a repeat of regulatory investigations of the lender.
While the review is under way, the bank will “suspend the on-boarding of new clients and the introduction of new products to existing clients in certain locations that have higher risk weightings,” Cryan said in a staff memo posted on the bank’s website late Friday. The Frankfurt-based lender said it won’t begin to work with new customers until it has completed all procedures requiring the bank to know its clients.
Cryan has sought to restore the confidence of investors and regulators in Germany’s largest bank, which has been battered by scandals, including the manipulation of benchmark interest rates. While Cryan has been cutting jobs and costs to help bolster profit after joining Juergen Fitschen as co-CEO in July, Deutsche Bank is facing renewed scrutiny amid a money-laundering probe in Russia.
Jeff Urwin, who runs Deutsche Bank’s corporate and investment bank unit, will lead the review with help from other top executives and senior staff across the company’s business units, according to the statement.
Cryan, 54, has said he’ll focus on customers that generate the most revenue and scale back in “high-risk” locations such as Russia, where the company said in September it would close its investment-banking business.
Deutsche Bank said last month that its probe into allegations of wrongdoing at the Russian equity unit unearthed violations of internal policies and identified weaknesses in oversight.
The U.S. Justice Department and authorities in the U.K. and Russia are investigating whether Deutsche Bank adequately vetted $6 billion in transactions that were part of a possible money-laundering scheme, people with knowledge of the matter said earlier this year.
The wider control lapses the bank is seeking to address have contributed to the highest litigation expenses among banks in Continental Europe. Deutsche Bank’s costs for legal settlements and fines since the beginning of 2008 amount to at least 12.3 billion euros ($13 billion), according to calculations based on company filings and court documents. That includes provisions for future penalties.
Deutsche Bank shares have dropped 4 percent this year after slumping 24 percent in 2014 under Fitschen and former co-CEO Anshu Jain.
The company’s review follows similar actions by other global banks.