Russian court freezes assets of three leading Western banks worth more than €700 million: details

A St. Petersburg arbitration court has seized assets of Deutsche Bank, UniCredit and Commerzbank in Russia totaling more than €700 million at the request of RusChemAlliance, a joint venture of Gazprom. This decision is part of a broader legal conflict caused by EU sanctions and the termination of contracts with European companies.

This was reported by the Financial Times. "This arrest is one of the biggest moves against Western lenders since Moscow's full-scale invasion of Ukraine forced most international lenders to withdraw or wind down their business in Russia. This comes after the European Central Bank urged eurozone lenders operating in Russia to accelerate their exit," the report said.

The lawsuit against Deutsche Bank was filed due to the bank's failure to fulfill its obligations under a contract with the German engineering company Linde, which suspended work due to EU sanctions. According to the Financial Times, in July 2021, RusChemAlliance signed a contract with Linde for the design, supply of equipment and construction of a complex for a gas processing plant and liquefied natural gas production in Ust-Luga near St. Petersburg. However, due to the sanctions, the work was suspended, and RusChemAlliance appealed to the guarantor banks to pay the bank guarantees.

According to court documents, the amount of Deutsche Bank's seized assets, including property and funds on accounts in Russia, is €238.6 million. The court has banned the bank from disposing of its 100% stake in the authorized capital of its Russian subsidiary, as well as the Deutsche Bank Technology Center LLC.

The arrest also affected the assets of UniCredit and Commerzbank. In particular, the assets of UniCredit were frozen in the amount of EUR 463 million, which is about 4.5% of the bank's assets in Russia. As for Commerzbank, the amount of the seized assets is not yet known, but RusChemAlliance asked the court to freeze the lender's assets worth up to EUR 94.9 million.

In response to the seizure of assets, Deutsche Bank said it had allocated significant funds to the case. "We will need to see how this claim is implemented by the Russian courts and assess the immediate operational impact in Russia," the bank said in a statement. They also said that the bank is fully protected by client reimbursement and has made a provision of around €260 million together with a corresponding reimbursement asset on its accounts to cover the Russian claim.

UniCredit noted that it had been informed of the filing of the lawsuit and that only assets relevant to the case would be subject to interim measures. Commerzbank did not respond to a request for comment.

As reported earlier, European banks, despite promises to close their branches in Russia after its invasion of Ukraine, tripled their profits due to high interest rates. Although pressure from the European Central Bank (ECB) and the threat of sanctions from the United States are forcing banks to accelerate their exit from the Russian market, difficult conditions complicate this process.

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