The Financial Times reported that a Russian court confiscated €800 million from Deutsche Bank, UniCredit, and Commerzbank.
Moscow has had enough after two years of being the target of a weaponized global reserve currency, being kicked out of SWIFT, countless (toothless) sanctions, and witnessing the freezing and eventual confiscation of about $350 billion in assets. This past weekend, the Financial Times reported that a St Petersburg court seized approximately €800 million in assets that belonged to three Western banks: Deutsche Bank, Commerzbank, and UniCredit.
Since Moscow’s invasion of Ukraine forced the majority of foreign lenders to leave Russia or shut down operations there, the seizure is one of the biggest actions taken against Western lenders. It follows the ECB’s directive to Eurozone lenders operating in the nation to expedite their exit strategies.
Court records say that the Italian bank UniCredit had assets valued at €463 million, or roughly 4.5% of its assets in the nation, as per the most recent financial statement from the firm’s principal Russian affiliate.
The court ruling, dated May 16, which was published in the Russian register on Friday, lists among the frozen assets stocks and funds controlled by UniCredit as well as shares in its Russian subsidiaries.
The court took assets worth €238.6 million from Deutsche Bank on the same day, including real estate and securities in its Russian accounts. The bank cannot sell its operations in Russia, the court further decided, as doing so would already need Vladimir Putin’s consent. Rukhimallians argued that the bank was “taking measures aimed at alienating its property in Russia,” and the court agreed.
Lastly, the court decided to seize Commerzbank’s assets on Friday. The specifics of the decision have not yet been made public, so it is unknown how much was seized. Ruskhimalliance requested that the court freeze the lender’s assets up to a total value of €94.9 million, and it is reasonable to believe that the final amount will be in the range.
The total amount of confiscated Western bank assets is estimated to be €800 million.
A claim from Ruskhimalliance, a division of the massive Russian oil and gas exporter Gazprom, prompted Russia to counter-confiscate. In Ust-Luga, close to St. Petersburg, Ruskhimalliance is the owner and operator of liquefied natural gas production and processing facilities. It agreed with Linde in July 2021 for the complex’s design, equipment supply, and building. Due to EU penalties, Linde ceased operations a year later.
The FT claims that the conflict with the Western banks started in August 2023 when Ruskhimalliance filed a request for payment of bank guarantees under a contract with the German engineering firm Linde in a St. Petersburg arbitration court.
The guarantor banks refused to fulfill their duties once Ruskhimalliance resorted to them, claiming in a court statement that “the payment to the Russian company could violate European sanctions.” Among the guarantors on the list are Landesbank Baden-Württemberg and Bayerische Landesbank, both of which Ruskhimalliance has sued at a St. Petersburg court.
After learning about the application, UniCredit stated that “only assets commensurate with the case would be in the scope of the interim measure.”To cover the Russian litigation, Deutsche Bank said it was “fully protected by an indemnification from a client” and had made a provision of roughly €260 million along with a “corresponding reimbursement asset” in its accounts.
“We will need to see how this claim is implemented by the Russian courts and assess the immediate operational impact in Russia,” it added.
According to two persons with knowledge of the arrangements who spoke to the Financial Times, Italy’s foreign minister has scheduled a meeting for Monday to talk about the seizures affecting UniCredit.
Through its subsidiary in Russia, UniCredit, one of the biggest European lenders, employs over 3,000 individuals. The Italian bank announced this month that, compared to €99 million a year earlier, its Russian division had a net profit of €213 million in the first quarter. It has drastically reduced the amount of loans it has outstanding and put aside more than €800 million in contingencies. This month, the lender’s CEO, Andrea Orcel, stated that although the company was “continuing to de-risk” its Russian activity, a complete withdrawal would be difficult.
As tensions between Moscow and the West increase, the European Central Bank has requested comprehensive plans on their exit options from Eurozone bankers operating in the nation, according to a Friday FT article.
Western banks’ attempts to free themselves have been hampered by legal disputes over assets they own. Over $400 million in cash was seized from JPMorgan Chase last month by a Russian court as a result of a legal action by VTB, a lender controlled by the Kremlin. Later, a judge canceled a portion of the scheduled seizure, according to Reuters.
GreatGameIndia reported last year that research by The New York Times found Western companies leaving Russia incurred losses exceeding $100 billion.
