According to court documents, three western banks’ assets worth over €700 mln ($773 mln) have been taken by a court in St. Petersburg. This was reported by the Financial Times and Reuters on Saturday.
One of the biggest moves against western lenders since Moscow’s invasion of Ukraine in 2022, when most of them shut down their operations in Russia, is the seizure.
These steps were taken after a claim from Ruskhimalliance, a branch of Gazprom, the Russian oil and gas giant that has a monopoly on exporting gas through pipelines.
Italy’s UniCredit UCG, -0.08% had €463 million worth of assets taken away by the court. This is about 4.5% of the bank’s assets in the country, according to the most recent financial statement from its main Russian subsidiary.
Shares in UniCredit’s Russian subsidiaries, as well as stocks and funds it owned, were frozen, according to a court decision from May 16 that was made public by the Russian registrar on Friday.
In a separate decision made on the same day, the court seized €238.6 million worth of Deutsche Bank’s DBK, +1.49% assets, such as property and money held in its Russian accounts.
The bank also can’t sell its business in Russia, the court said. The court agreed with Rukhimallians that the steps had to be taken because the bank was “taking steps to sell its property in Russia.”
The court chose to seize Commerzbank CBK, +1.98% assets on Friday, but the decision’s details have not been made public yet, so it is not known how much the seizure is worth.
In August 2023, Ruskhimalliance went to an arbitration court in St. Petersburg and demanded that the western banks pay bank guarantees under a contract with the German engineering company Linde. This was the start of the fight with the western banks. The banks were one of the guarantor lenders in a deal with Germany’s Linde (LIN.DE) to build a gas processing plant in Russia. The deal had to be broken because of Western sanctions.
In Ust-Luga, which is close to St. Petersburg, Ruskhimalliance runs a gas processing plant and facilities for making liquefied natural gas. A deal was made with Linde in July 2021 for the design, supply of equipment, and building of the complex. After a year, EU sanctions forced Linde to stop working.
The Russian company then went to the guarantor banks, but they wouldn’t do what they were supposed to because “paying the Russian company could violate European sanctions,” the company said in the court filing.
Bayerische Landesbank and Landesbank Baden-Württemberg are also on the list of guarantors. Ruskhimalliance has also sued these banks in a court in St. Petersburg.
UniCredit said it knew about the filing and that “only assets relevant to the case would be covered by the interim measure.”
Deutsche Bank said that it was “fully protected by an indemnification from a client” and that it had set aside about €260mn and added a “corresponding reimbursement asset” to its books to cover the Russian lawsuit.
When asked for a comment, Commerzbank did not respond right away.
Two people who know about the plans told the Financial Times that Italy’s foreign minister has called a meeting for Monday to talk about the seizures that are happening to UniCredit.
Through its subsidiary in Russia, UniCredit employs more than 3,000 people and is one of the biggest European lenders in the country. This month, the Italian bank said that its Russian business had made a net profit of €213 million in the first quarter. This is more than the €99 million it made in the same period last year. It has set aside more than €800 million in provisions and cut back on the number of loans it has by a large amount.
Legal problems with assets that western banks own have made it harder for them to get out of trouble. Russsian courts took more than $400 million from JPMorgan Chase JPM, +1.15% last month after a lawsuit from VTB, a lender backed by the Kremlin. Reuters said that a court later canceled part of the planned seizure.
