European financial institutions turn their backs on Russia

FRANKFURT/LONDON/ZURRICH: Deutsche Bank changed course and said it would withdraw from Russia completely while the London Stock Exchange suspended all its services in the country as Western governments impose sanctions over the invasion of Ukraine.

Deutsche, which had been sharply criticized by some investors and politicians for its continued ties to Russia, said late Friday it would end its operations there.

The surprise move puts the German lender alongside major US banks Goldman Sachs and JPMorgan Chase, which left Russia after the February 24 invasion, and will increase pressure on rivals to cut ties.

Deutsche had argued that it should support multinational companies doing business in Russia.

But on Friday evening in Frankfurt, the bank suddenly reversed course.

“We are in the process of scaling down our remaining business in Russia while helping our non-Russian multinational customers scale down their business,” Deutsche said.

“There will be no new cases in Russia.”

Insurer Zurich is no longer taking on new customers in Russia and will not extend existing business, a spokesperson told Reuters on Monday.

Wealth managers have also said they will not make new investments in Russia, and many Russian-focused funds have been frozen due to Russia’s inability to act on Western sanctions and countermeasures.

Diplomatic efforts to end the war were launched on Monday, with Ukrainian and Russian negotiators said to talk again after both sides reported progress, though Russia attacked a base near the Polish border and fighting raged elsewhere.

Russia calls its actions in Ukraine a “special operation.”

Britain’s London Stock Exchange Group said late Friday it was suspending all products and services for all customers in Russia, days after the distribution of news and commentary in the country was suspended due to new laws in Moscow.

“LSEG confirms that it is suspending all products and services for all customers in Russia, subject to any legal requirements,” the company said in a statement.

“We will continue to support our employees in the region. We also work with our customers outside of Russia who depend on us for data and pricing information within Russia. We are evaluating alternative options to continue providing these services.”

Index provider FTSE Russell said Monday it would remove four UK-listed Russia-focused companies, including Roman Abramovich’s Evraz, after many brokers refused to trade their shares.

Evraz, along with Polymetal International, Petropavlovsk and Raven Property Group, would be removed from all indexes of the FTSE during the March review, it said in a statement.

FTSE Russell said it had received feedback from its outside advisory committees and market participants that trading in the stock had been “seriously restricted” as brokers refused to handle the securities, affecting market liquidity.

“As a result, this will prevent index trackers from replicating the continued inclusion of these names in the FTSE Russell indices,” said FTSE Russell.

JPMorgan says most of the projected risk to European banks from the shock in Russia will come from commodity and economic spillovers, with the sector down 16 percent since the end of February.

European banking shares, however, are off their lows, rising 2.9 percent on Monday.

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