(Bloomberg Opinion) -- Members of Congress are scrutinizing Deutsche Bank AG over its dealings with President Donald Trump and how it helped launder money for Russian clients. But are they overlooking the wealth of information Citigroup Inc. has on the country?
Last week, the House Financial Services Committee tapped a Senate lawyer with deep experience conducting complex investigations. Bob Roach and the committee may want to cast their net wider than just Germany’s largest lender.
It wasn’t operating in Russia in isolation. After the 2016 election, the lender tried to rid itself of a loan to state-owned Russian lender VTB Group by shopping it around to other financial firms — among them Citigroup — the Wall Street Journal has reported. But efforts to sell $280 million of it to the U.S. bank failed, the WSJ said, without elaborating.
No one has been accused of any wrongdoing in relation to the loan nor its sale. But establishing what circumstances led Citigroup to walk away from the transaction could help the House committee understand what concerns the bank may have had about VTB and its backers.
Was it just the price that Citigroup didn’t feel comfortable with? Or were there reputational or compliance concerns that the U.S. lender didn’t want exposure to? Did any of the president’s associates, as has been alleged, have a connection to this state-owned Russian lender? Citigroup’s due diligence on VTB could be a treasure trove for investigators.
Equally, Citigroup’s own century-long ties to Russia and the sizable business it runs there give the U.S. lender an unparalleled perspective on the broader money flows in and out of the country. Why not dip into this pool of information?
In an industry dominated by a handful of behemoths, Citigroup ranks 21st by assets in Russia, and 11th by profit, according to data compiled by Banki.ru. In recent weeks, it was one of a handful of lenders state-owned energy giant Gazprom tapped, receiving a 425 million-euro ($482 million) loan from the U.S. company, according to Interfax.
Along with other foreign competitors, it has been expanding its network of affluent clients, benefiting from the threat of U.S. sanctions that has made savers weary of parking their cash with only Russian banks. In October, Citigroup’s head of premium banking in Russia told reporters the lender was adding 100 individual customers every month.
The bank boasts 3,000 corporate and 500,000 consumer clients in Russia. Its country exposure totaled $4.1 billion in the third quarter — that’s a little more than the 3.5 billion euros Deutsche Bank had in Russia in 2015, when its business there came under scrutiny for laundering billions for wealthy clients.
Obtaining information about Russia from a U.S. bank may well be easier than seeking documents from a foreign bank. Deutsche Bank’s interactions with European clients may not have gone through the U.S. at all — something that may not apply to its New York-based rival.
Roach is known for reviewing thousands of documents and witness depositions. There may be plenty to go through at Citigroup.
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Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.
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