Russian court seizes assets worth €700 million from UniCredit, Deutsche Bank and Commerzbank

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A court in St. Petersburg has seized more than €700 million worth of assets owned by three Western banks – UniCredit, Deutsche Bank and Commerzbank, according to court documents.

The seizure marks one of the biggest moves against Western lenders since Moscow’s massive invasion of Ukraine prompted most international lenders to withdraw or end their operations in Russia. It comes after the European Central Bank ordered eurozone lenders with operations in the country to speed up their exit plans.

The measures follow a claim by Ruskhimalliance, a subsidiary of Gazprom, the Russian oil and gas giant that has a monopoly on pipeline gas exports.

The court has seized 463 million euros worth of assets from Italy’s UniCredit, equivalent to about 4.5 percent of assets in the country, according to the latest financial statement from the bank’s main Russian subsidiary.

Frozen assets include shares in UniCredit subsidiaries in Russia, as well as shares and funds it owned, according to the court ruling dated May 16 and published in the Russian register on Friday.

According to another ruling from the same date, the court seized €238.6 million in Deutsche Bank assets, including property and assets in its accounts in Russia.

The court also ruled that the bank cannot sell its activities in Russia; this would already require Vladimir Putin’s approval. The court agreed with Rukhimallians that the measures were necessary because the bank “took measures aimed at alienating its assets in Russia”.

On Friday, the court decided to seize Commerzbank’s assets, but the details of the decision have not yet been made public, so the value of the seizure is not known. Ruskhimalliance asked the court to freeze the lender’s assets worth €94.9 million.

The dispute with the Western banks began in August 2023 when Ruskhimelliance went to an arbitration court in St. Petersburg and demanded that they pay bank guarantees under a contract with German engineering company Linde.

Ruskhimalliance is the operator of a gas processing plant and liquefied natural gas production facilities in Ust-Luga, near Saint Petersburg. In July 2021, it signed a contract with Linde for the design, supply of equipment and construction of the complex. A year later, Linde suspended work due to EU sanctions.

Ruskhimalliance then turned to the guarantor banks, which refused to honor their obligations because “the payment to the Russian company could violate European sanctions,” the company said in the lawsuit.

The list of guarantors also includes the Bayerische Landesbank and the Landesbank Baden-Württemberg, against which Ruskhimalliance has also filed lawsuits in the court in Saint Petersburg.

UniCredit said it had been notified of the filing and that “only assets consistent with the case would fall within the scope of the interim measure.”

Deutsche Bank said it was “fully protected by client indemnity” and had recognized a provision of around €260 million in addition to a “corresponding reimbursement asset” in its accounts to cover the Russian lawsuit.

“We will have to see how this claim is implemented by the Russian courts and assess its immediate operational impact in Russia,” it added.

Commerzbank did not immediately respond to a request for comment.

Italy’s foreign minister convened a meeting on Monday to discuss UniCredit’s seizures, two people with knowledge of the plans told the Financial Times.

UniCredit is one of the largest European lenders in Russia and employs more than 3,000 people through its subsidiary there. This month, the Italian bank reported that its Russian operations posted a net profit of €213 million in the first quarter, up from €99 million a year earlier.

The country has set up more than 800 million euros in provisions and significantly reduced its loan portfolio. Chief executive Andrea Orcel said this month that while the lender continued to “de-risk” its Russian operation, a complete exit from the country would be complicated.

The FT reported on Friday that the European Central Bank had asked euro zone lenders with operations in the country to provide detailed plans for their exit strategies as tensions between Moscow and the West rise.

Legal problems over the assets of Western banks have complicated their attempts to free themselves. Last month, a Russian court ordered the seizure of more than $400 million in funds from JPMorgan Chase following a legal challenge by Kremlin-run lender VTB. A court subsequently canceled part of the planned seizure, Reuters reports.

Additional reporting by Martin Arnold in Frankfurt

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