Russian courts seize UniCredit, Deutsche bank Russian assets

Russian courts seize  UniCredit, Deutsche bank Russian assets
Two of the five big European banks in Russia, UniCredit and Deutsche Bank, had their assets seized after being sued for not meeting guarantee obligations made for a failed gas project. / bne IntelliNews
By bne IntelliNews May 18, 2024

Russian courts ordered the seizure of UniCredit's and Deutsche bank assets, accounts, property, and shares on May 18

The UniCredit assets have been seized following a St Petersburg arbitration court ruling concerning two subsidiaries in connection with a lawsuit over an aborted gas project, according to court documents.

The St Petersburg ruling affects €462.7mn ($503mn) in securities, real estate, and accounts belonging to UniCredit. Additionally, it covers 100% of shares in UniCredit Leasing and UniCredit Garant, both subsidiaries of AO UniCredit Bank, the Italian group's Russian arm, which held €8.67bn in assets at the end of 2023, down from €10.16bn the previous year.

In a statement, UniCredit said the seizure impacted only a fraction of their Russian unit's assets. "The rest of the details we are currently reviewing," the bank stated.

The same court in St Petersburg ruled in favour of seizing $260mn from Deutsche Bank, documents dated May 16 showed.

Both decisions came in answer to a complaint made by RusKhimAlians, which was planning to build a major gas processing and liquefaction plant in cooperation with German company Linde, which pulled out of the project due to Russia's military assault, the Moscow Times reports.

RusKhimAlians is a joint venture 50% owned by Russian gas giant Gazprom and made a €2bn advance payment on the €10bn contract, according to the UK's Supreme Court website, Reuters reports. The two foreign banks had guaranteed the financing for the project.

UniCredit is Europe's second-largest lender in Russia, after Austria's Raiffeisen Bank International (RBI), which has also resisted calls to leave the market and faces increasing pressure from eurozone banking supervisors to scale back its operations there.

Both UniCredit and RBI claim they have been looking for buyers, but that no prospective buyer has been found.

UniCredit CEO Andrea Orcel reiterated the bank wants to leave Russia, but that “gifting an operation worth €3bn” was “not a good way to respect the spirit of Western sanctions on Moscow.”

Austrian authorities recently warned Raiffeisen Bank over a deal with Russian oligarch Deripaska. Raiffeisen has been interested in buying a $1.6bn stake in the construction company Strabag, which is reportedly controlled by Deripaska.

Two years after the start of Russia's full-scale invasion of Ukraine, major European banks continue to operate increasingly profitable branches in Russia despite public promises to close them. Bloomberg reported that the combined number of employees of the five EU banks with the largest operations in Russia fell by only 3% after the invasion, while profits increased by about 200% thanks to the high interest rates on the funds stuck in the country.

RusKhimAlians is seeking to recover €448mn under the bonds, including nearly €444mn from the 2021 guarantee package and €4.5mn in penalties. It filed the lawsuit in St Petersburg after tapping the guarantee scheme, as UniCredit could not honour the payment claims due to the sanctions.

In April, the UK's Supreme Court instructed RusKhimAlians to cease suing UniCredit in Russia over the terminated gas project. However, the Russian court dismissed UniCredit's jurisdictional defence and scheduled a hearing for the second quarter.

RusKhimAlians also filed lawsuits against Deutsche Bank and Commerzbank in relation to the aborted Linde plant, Russian court documents showed in July.