Skip to Content

Russian court seizes assets worth over $700 mln from UniCredit, Deutsche Bank and Commerzbank

By MarketWatch

The move against western lenders follows a dispute with a subsidiary of Gazprom

A St Petersburg court has seized over EUR700 mln ($773 mln) worth of assets belonging to three western banks - UniCredit, Deutsche Bank and Commerzbank - according to court documents, the Financial Times and Reuters reported Saturday.

The seizure marks one of the biggest moves against western lenders since Moscow's invasion of Ukraine in 2022 prompted most international lenders to wind down their businesses in Russia.

The moves follow a claim from Ruskhimalliance, a subsidiary of Gazprom , the Russian oil and gas giant that holds a monopoly on pipeline gas exports.

The court seized EUR463mn-worth of assets belonging to Italy's UniCredit (IT:UCG), equivalent to about 4.5 per cent of its assets in the country, according to the latest financial statement from the bank's main Russian subsidiary.

The frozen assets include shares in subsidiaries of UniCredit in Russia as well as stocks and funds it owned, according to the court decision that was dated May 16 and was published in the Russian registrar on Friday.

According to another decision on the same date, the court seized EUR238.6mn-worth of Deutsche Bank's (XE:DBK) assets, including property and holdings in its accounts in Russia.

The court also ruled that the bank cannot sell its business in Russia. The court agreed with Rukhimallians that the measures were necessary because the bank was "taking measures aimed at alienating its property in Russia".

On Friday, the court decided to seize Commerzbank (XE:CBK) assets, but the details of the decision have not yet been made public so the value of the seizure is not known.

The dispute with the western banks began in August 2023 when Ruskhimalliance went to an arbitration court in St Petersburg demanding they pay bank guarantees under a contract with the German engineering company Linde. The banks were among the guarantor lenders under a contract for the construction of a gas processing plant in Russia with Germany's Linde (LIN.DE) which was terminated due to Western sanctions.

Ruskhimalliance is the operator of a gas processing plant and production facilities for liquefied natural gas in Ust-Luga near St 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 owing to EU sanctions.

Ruskhimalliance then turned to the guarantor banks, which refused to fulfil their obligations because "the payment to the Russian company could violate European sanctions", the company said in the court filing.

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

UniCredit said it had been made aware of the filing and "only assets commensurate with the case would be in scope of the interim measure".

Deutsche Bank said it was "fully protected by an indemnification from a client" and had taken a provision of about EUR260mn alongside a "corresponding reimbursement asset" in its accounts to cover the Russian lawsuit.

Commerzbank did not immediately respond to a request for comment.

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

UniCredit is one of the largest European lenders in Russia, employing more than 3,000 people through its subsidiary there. This month the Italian bank reported that its Russian business had made a net profit of EUR213mn in the first quarter, up from EUR99mn a year earlier. It has set aside more than EUR800mn in provisions and has significantly cut back its loan portfolio.

Legal challenges over assets held by western banks have complicated their efforts to extricate themselves. Last month, a Russian court ordered the seizure of more than $400mn of funds from JPMorgan Chase (JPM) following a legal challenge by Kremlin-run lender VTB. A court subsequently cancelled part of the planned seizure, Reuters reported.


This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.


(END) Dow Jones Newswires

05-18-24 1200ET

Copyright (c) 2024 Dow Jones & Company, Inc.

Market Updates

Sponsor Center