Russian Court Seizes Over €700M From Western Banks

A Russian court has seized assets worth over €700 million from three major Western banks, namely UniCredit, Deutsche Bank, and Commerzbank, marking one of the biggest moves against international lenders since the invasion of Ukraine. The seizures, first reported on by the Financial Times, follow the European Central Bank urging eurozone banks to accelerate their exit from Russia.

The court orders follow claims by Ruskhimalliance, a Gazprom subsidiary, against the banks in relation to a 2021 contract for the construction of a gas processing facility near St. Petersburg.

The key seizures include:

  • UniCredit: €463M in assets seized, around 4.5% of its Russian assets
    • Includes shares in Russian subsidiaries, stocks and funds
  • Deutsche Bank: €238.6M in assets frozen
    • Includes property and Russian account holdings
    • Banned from selling its Russian business without Kremlin approval
  • Commerzbank: Assets seized but value not yet disclosed
    • Ruskhimalliance sought to freeze up to €94.9M

The dispute stems from Ruskhimalliance’s 2021 contract with Linde for a gas plant that was to be constructed near St. Petersburg. When Linde suspended work in 2022 due to sanctions, Ruskhimalliance turned to the guarantor banks who refused payment, citing sanctions risks.

In response to the ruling, UniCredit says that only case-related assets are impacted, while Deutsche Bank claims indemnification from its client, and has accounted for a €260 million provision. Commerzbank meanwhile refused to comment on the matter.

Italy’s foreign minister has called a meeting over the UniCredit seizure. The bank is one of Europe’s largest in Russia with over 3,000 staff, reporting a Q1 2024 Russian net profit of €213 million. The ECB is pressing eurozone lenders on Russia exit plans amid growing East-West tensions. Legal battles over assets have complicated departures.

Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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