Deutsche Bank, the German-based financial services giant, has disclosed more details about its risk exposures to Russia and Ukraine on Wednesday. Basically, the financial services firm stated that it had reduced its Russian exposure and local footprint ‘significantly’ since 2014, with further reductions amid the crisis in the past two weeks.
"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,” Stuart Lewis, the Chief Risk Officer and Member of the Management Board at Deutsche Bank, commented.
The bank’s exposure to Russia and Ukraine represents a very small percentage of its overall loan portfolio and is protected by several risk mitigation measures. While market risk exposures have been significantly reduced prior to and following Russia’s invasion of Ukraine, these measures include offshore collateral and financial guarantees.
For example, as of December 31, 2021, the net loan exposure to Russia was EUR 0.6 billion after taking into account the guarantees and asset collateral. Also, net loan exposure to Ukraine was EUR 42 million at that time, which is EUR 0.6 billion gross.
In addition, Deutsche Bank clarified that the wealth management business’s offshore loans to counterparties with a Russian connection were adequately collateralized, and the collateral is not tied to Russia.
The German-based financial services giant also clarified that its Russian/Ukraine market risk exposure was ‘well contained’ and the bank had a ‘modest defensive position’.
Deutsche Bank 2021 Net Profits
Deutsche Bank reported a significant jump in its net profit as the number surpassed EUR 2.5 billion in 2021, which is the highest level since 2011.
In terms of profit before tax, the bank reported a figure of EUR 3.4 billion in the last year. Deutsche Bank witnessed strong growth across all of its four core businesses. In Q4 of 2021, the bank posted a net profit of EUR 315 million, which is up 67% compared to the same period last year.
