Deutsche Bank notifies investors of missing part of their Russian shares – Kommersant

Deutsche Bank has told its clients that it can no longer guarantee full access to their Russian shares, Reuters reports. According to the agency, foreign investors face difficulties in returning “stuck investments” in Russian companies.

Reuters cites a June 9 letter from Deutsche Bank. According to him, the bank found a shortage of shares that provide depositary receipts issued by the bank before the start of the Russian military operation in Ukraine. These shares are in Russia in another depositary bank, its name is not given. Deutsche Bank explained the situation by Moscow’s decision to allow investors to convert part of depository receipts into Russian shares. The conversion was carried out without the “participation or supervision” of the German bank, the document claims.

According to Reuters, the shares of Aeroflot, the construction company LSR Group, Mechel and the Novolipetsk Iron and Steel Works were affected. The agency notes that this is the first major bank to formally notify holders of depository receipts that they may not receive ownership of all their shares.

Deutsche Bank is now allowing investors to exchange depositary receipts for shares as part of its exit plans in Russia, a source told Reuters. JPMorgan & Chase, Citigroup and BNY Mellon act as depository banks for most other Russian depositary receipt programs. All three banks declined to comment on whether they also identified stock weaknesses.

In its letter, Deutsche Bank said it would try to return more shares to their rightful owners, but that the net proceeds from the sale of the shares “are likely to be substantially below the market price.” According to the bank, the government commission of the Russian Federation requires that such shares be sold “at a discount of at least 50% of their estimated market value.”

Mechel declined to comment, the rest of the companies did not comment on the information. The National Settlement Depository of Russia stated that “the conversion of shares was carried out in accordance with Russian legislation and that the accounting organization is not responsible for the implementation of this mechanism.”

Deutsche Bank in March 2022 closed the business in Russia. In April, a German bank turned off euro accounts of several Russian banks, in June took out hundreds of IT-specialists from Russia. In April 2023 Deutsche Bank decided to close IT centers in Moscow and St. Petersburg.

Laura Keffer