Deutsche Bank Aktiengesellschaft (NYSE: DB) has been seeing some significant activity in the market over the weekend. Losing nearly 4.5% on Friday, Germany’s largest lender saw a 9.3% bounce back in the premarket this morning. This comes in the broader trend of a bearish movement throughout the month denoting a loss of 35.7% in value. The trajectory throughout this period sensitively relates to the events in Eastern Europe, given DB’s exposure to Russia.
Earlier Backlash on DB
The tumultuous volatility from this morning relates primarily to a recent announcement by DB’s CEO of plans to wind down business in Russia. This comes after a previous announcement to remain in the country’s financial market, which resulted in a heavy backlash by investors. The management evidently backed down on its decision, and ultimately caved in the popular pressure levelled against it. The move sparked high volatility within the market given high uncertainty regarding the decision. This had then later stabilized as investors saw DB as protected against exposure to risk presently inherent to Russia. The decision led to a bounce-back in DB stock price after disgruntled investors regained confidence over the prospects of the bank. The financial advantage of distancing itself from Russia clearly signaled positivity across the market.
DB’s Russia Exposure
The exposure DB has held in Russia has not been that of a standard bank holding market presence within the country. The link is far more critical since the banking giant holds critical fintech technologies operational from within Russia. These are employed to assist its broader functions, particularly across the European markets, for which it employs 1500 Russian employees. However, executives at DB stress that based on recent testing, its IT infrastructure holds no serious risk.
This is not the first time the Russian Federation has landed DB into trouble, due to its activities. The bank was charged with a $700M fine after the US Department of Justice exposed negligence. This is related to money laundering of $20B out of the country, following years of investigation.
Conclusion
DB stock saw a significant bounce back, following the bank’s decision to reverse its earlier position regarding Russia. Its winding down of business in the country instils confidence in its investors. Furthermore, it is likely the move would distance DB from the risks inherent to Russia, against the onslaught of global sanctions.