Deutsche Bank closing shop here
Deutsche Bank is closing shop in Ethiopia by terminating its business relationship with many Ethiopian banks.
Over the past three weeks alone, the German bank has terminated its business as a correspondent bank with Enat and Berhan banks. Moreover, the bank suspended its relationship with Debub Global Bank, Bunna International as well as Abay banks over the last year.
“The move has come following the revision of its global footprint and will review many of its businesses and markets the bank is operating in globally,” an email to The Reporter by Frank Hartmann, press and media relations officer at Deutsche Bank, noted.
The bank reviewed its business on the back of revenue declines, Hartmann said.
“We have reviewed markets, products and regions based on these considerations,” he said.
Industry sources, who spoke with The Reporter, associate the departure with compliance issues and risk returns over business relationship between Deutsche and Ethiopian banks.
“It is because doing business with Ethiopian banks is becoming less profitable and has more risk for Deutsche,” according to a CEO of a local private bank.
The bank has to spend at least 50,000 euros to deal with a single bank in terms of logistics, hiring personnel, the banker said.
Others familiar with international banking attribute the move to a very restrictive regulatory regime such as that of the United States Federal Reserve. This fiscal year alone, the reserve imposed a USD 41 million penalty against the US operations of Deutsche Bank AG for violation of money laundering regulations.
Deutsche has agreed to pay around 15 billion euros in fines and settlements for wrongdoings in just the past five years, according to an article published by Handelsblatt Global, a leading German-based business newspaper.
Such incidents have somehow pushed the bank to concentrate its businesses in Germany.
In the past two years, the bank has withdrawn from Argentina, Peru, Chile and Mexico. The bank has also scaled down many of its correspondent banking operations in Kenya, Nigeria, Angola, Estonia and Lithuania, according to an email message from the bank.
Following the termination of Deutsche correspondent banking services, we are trying to find partners from the Middle East and South East Asia, the local bank CEO said.
Established almost 150 years ago, Deutsche Bank is one of the leading global banks.
As of May 2017, the bank was ranked 441 in Forbes 2000 list. In the same period, its market cap has reached USD 34 billion. It employs close to 99, 744 people.
It is to be recalled that the Ethiopian government selected Deutsche Bank AG and JPMorgan Chase to manage the sale of Eurobond, which was designed to finance electricity, railway and sugar industry projects.