Morgan Stanley to withdraw from Russia
In the first quarter of 2020, the American investment bank Morgan Stanley will notify the Bank of Russia that it is ceasing its banking activity in Russia, according to the report for 2018 by the bank’s Russian division.
The bank will surrender its brokerage and depository licenses and close the corresponding departments. Morgan Stanley will convert its remaining business into a company that offers consulting services for investments and property.
The bank’s report notes that, as a result of the sanctions imposed on Russia in 2014, it is virtually impossible for western investment banks to operate in the Russian capital and mergers and acquisitions markets. Another concern is that the Russian laws that regulate business can change quickly, and are also subject to “ambiguous interpretation”.
Bloomberg reported previously that Morgan Stanley intends to reduce its presence in Russia by shutting down its stock and currency exchange departments. At the time, the bank was expected to continue its corporate financing activity in Russia.
Morgan Stanley is not the first major western bank to cut back on its operations in Russia due to sanctions – similar action has already been taken by The Royal Bank of Scotland, Deutsche Bank and Barclays. Since the divisions in Russia cannot transact on the capital market or participate in mergers and acquisitions, they cannot generate enough profit.
Morgan Stanley opened its Russian offices in 1994. It obtained licenses for banking, securities trading, brokerage, dealership and depository activities. At present, the bank focuses on conversion operations, securities and derivative financial instruments, and investment and financial services such as mergers and acquisitions, IPOs etc.
In March, the EU extended by further six months its sanctions on Russian physical and legal entities for aggression against Ukraine. The sanctions are also supported by the US and Canada.