Russian court seizes €700 million in assets from UniCredit, Deutsche Bank, and Commerzbank

The Western lenders lost lawsuits filed by a subsidiary of the state-owned giant Gazprom. Is IKEA next?

A court in the city of St. Petersburg has confiscated over €700 million in assets from three major Western banks — UniCredit, Deutsche Bank, and Commerzbank — according to court documents.

This marks one of the most significant actions against Western financial institutions since Russia's invasion of Ukraine prompted many international lenders to reduce or exit their Russian operations, Reuters and FT report.

The court ruling, which formally has a commercial motivation, may be a veiled response to the European Union’s decision to transfer the profits from Russia’s frozen assets in the West to Ukraine. The move also follows guidance from the European Central Bank urging Eurozone banks to table plans for their withdrawal from the Russian market.

More to read:
E.U. foreign ministers decided to transfer profits from frozen Russian assets to Ukraine

The court's action is rooted in a claim from RusKhimAlians, a subsidiary of the Russian state-owned energy giant Gazprom. The seized assets include €463 million from Italy's UniCredit, which represents approximately 4.5% of its assets in Russia, according to the latest financial statement from its primary Russian subsidiary. The frozen assets consist of shares in UniCredit’s Russian subsidiaries, stocks, and funds.

Additionally, the court seized €238.6 million from Deutsche Bank, encompassing property and holdings in its Russian accounts. The ruling also prevents Deutsche Bank from selling its Russian business, a transaction that would already require approval from the Kremlin leader, Vladimir Putin.

The court sided with RusKhimAlians, which argued that the bank was attempting to dispose of its Russian assets.

Deutsche Bank's office in Moscow. 

The court also ordered the seizure of Commerzbank’s assets on Friday, though the details and value of this seizure have not been disclosed. RusKhimAlians had requested the court to freeze up to €94.9 million of Commerzbank’s assets.

The conflict originated in August 2023 when RusKhimAlians approached an arbitration court in St. Petersburg, demanding that the banks honor guarantees under a contract with the German engineering firm Linde.

RusKhimAlians manages a gas processing and LNG production facility in Ust-Luga near St. Petersburg. In July 2021, it contracted Linde for design, equipment supply, and construction of the plant. However, Linde halted its work in 2022 due to E.U. sanctions, prompting RusKhimAlians to seek compensation from the guarantor banks, which refused, citing potential violations of European sanctions.

RusKhimAlians's list of guarantors also includes Bayerische Landesbank and Landesbank Baden-Württemberg, against whom lawsuits have also been filed in the St. Petersburg court.

The dispute was originally scheduled to be settled under English law, and British judges sided with the European banks, therefore the Russian company demanded a trial at home.

More to read:
Russia seizes property from two foreign investors

UniCredit is one of the largest European lenders in Russia, employing over 3,000 people there and posting a net profit of €213 million from its Russian operations in the first quarter, up from €99 million compared with the previous year. The bank has set aside over €800 million in provisions and significantly reduced its loan portfolio.

Among Western banks, Austria’s Raiffeisen Bank holds the biggest share of Russia’s financial market, acting as a bridge between the aggressor and the international financial market.

Last month, a Russian court ordered the seizure of over $400 million from JPMorgan Chase following a lawsuit by Kremlin-controlled VTB, though part of this seizure was later annulled by the same court.

In February, Russia also ordered a local subsidiary of IKEA to pay $140 million in penalties over alleged tax arrears. The Swedish furniture maker has left Russia after the invasion of Ukraine but still owns a few assets in this country.

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