Deutsche Bank Raises Concerns About Client's Missing Russian Shares

Deutsche Bank AG DB disclosed that it could no longer guarantee full access to clients' Russian stocks, emphasizing global investors' challenges in recovering trapped investments in the country's companies.

DB stated identifying a shortfall in the shares backing the bank's depositary receipts (DRs) allocated before the Ukraine invasion, which has been held in Russia by a different depositary bank, in a statement viewed by Reuters. 

As per the bank, the shortfall is due to Moscow's decision to allow investors to convert some DRs into local stock. 

The share conversion occurred without DB's "involvement or oversight," and the bank could not reconcile the company shares with the DRs.

"To a certain extent, this resulted in double counting because, without a reconciliation between Russia and foreign banks, an investor could get Russian shares and still hold the DRs at the foreign bank," said Grigory Marinichev, a partner at law firm Morgan Lewis.

Notably, Moscow is asking for a 10% contribution to the federal budget, termed an "exit tax" by Washington. 

DB is now allowing investors to swap DRs for shares as a part of its plans to exit Russian business, as per a source.

Also Read: Deutsche Bank Streamlines Mortgage Business: Report

As per the report, the conversions affected shares of Aeroflot, LSR Group, Mechel, and Novolipetsk Steel.

Last month, DB stated it is taking proactive steps toward entering the digital assets space.

Price Action: DB shares are trading lower by 0.50% at $9.90 premarket on the last check Monday.