(More Bank Opinion) – Members of Congress are reviewing relations with Deutsche Bank AG with President Donald Trump and explaining how it has helped launder money for Russian clients. But do they neglect Citigroup Inc.'s wealth of information about the country?
Last week, the House Financial Services Committee engaged a Senate solicitor with extensive experience conducting complex investigations. Bob Roach and the committee may want to expand their network beyond the main German lender.
It did not work in Russia in isolation. After the election of 2016, the lender tried to get rid of a loan granted to the Russian group VTB, a state lender, by looking for it from other financial companies, including Citigroup , according to the Wall Street Journal. But efforts to sell $ 280 million to the US bank have failed, said the WSJ without further details.
No one has been accused of any wrongdoing regarding the loan or its sale. However, determining the circumstances that led Citigroup to withdraw from the transaction may help the House committee understand the concerns the bank may have about VTB and its sponsors.
It was just the price with which Citigroup did not feel comfortable? Or were there any reputational or compliance issues that the US lender did not want to be exposed to? Did one of the president's associates, as alleged, have a connection with this Russian state-owned lender? Citigroup's due diligence on VTB could be a treasure for investigators.
Similarly, Citigroup's centuries-old ties to Russia and the important business it operates in this country provide the US lender with an unprecedented perspective on the broader cash flows into and out of the country. Why not tap into this information pool?
In a sector dominated by a handful of giants, Citigroup ranks 21st for assets in Russia and 11th for profit, according to data compiled by Banki.ru. In recent weeks, it was one of the few giant lenders in the energy sector, Gazprom, to have benefited from a loan of 425 million euros (482 million euros). million) from the American company, according to Interfax.
Along with other foreign competitors, it is expanding its network of wealthy clients, benefiting from the threat of US sanctions that is forcing savers to tire of being able to park their money only by Russian banks. In October, Citigroup's head of premium banking in Russia told reporters that the lender was adding 100 individual customers each month.
The bank has 3,000 companies and 500,000 customers in Russia. Its country exposure totaled $ 4.1 billion in the third quarter, a little more than the 3.5 billion euros that Deutsche Bank had in Russia in 2015, when its activity was closely examined to launder billions for wealthy clients.
Getting information about Russia from a US bank might be easier than asking for documents from a foreign bank. Deutsche Bank's interactions with European customers may not have crossed the United States at all – which may not apply to its New York-based rival.
Roach is known to have examined thousands of documents and witness statements. There can be a lot of things to do at Citigroup.
To contact the author of this story: Elisa Martinuzzi emartinuzzi@More Bank.net
To contact the editor responsible for this story: Edward Evans at eevans3@More Bank.net
This column does not necessarily reflect the opinion of the Editorial Board or More Bank LP and its owners.
Elisa Martinuzzi is a columnist for More Bank Opinion in finance. She is a former editor-in-chief for European finance at More Bank News.
For more articles like this, go to More Bank.com/opinion
© 2019 More Bank L.P.