May 19, 2024
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Russia Freezes Assets of Deutsche Bank, Commerzbank, and UniCredit Amid Legal Dispute

A Russian court has frozen over €1 billion in assets from Deutsche Bank, Commerzbank, and UniCredit following lawsuits by a Gazprom joint venture.
Russia Freezes Assets of Deutsche Bank, Commerzbank, and UniCredit Amid Legal Dispute
Astemir Almov - Unsplash

A Russian court has frozen the local assets of Deutsche Bank AG, Commerzbank AG, and UniCredit SpA under lawsuits totalling more than €1 billion filed by a Gazprom PJSC venture, RusKhimAlians. This move impacts both German and Italian banks operating in Russia.

The Arbitration Court of the St. Petersburg and Leningrad region issued the freeze on May 16. The affected assets include stakes in Russia-based related companies, real estate, and cash in bank accounts. Specifically, UniCredit Bank AG and its Moscow-based counterpart, UniCredit Bank AO are part of this legal action. Similarly, the court froze Deutsche Bank's securities, real estate, and funds, as well as Commerzbank's Russian assets.

The asset freeze breaks down as follows:
- UniCredit: €462.7 million
- Deutsche Bank: €238.6 million
- Commerzbank: €93.7 million

In response, UniCredit acknowledged the court filing and stated that only assets commensurate with the case are within the scope of the interim measure. Deutsche Bank, meanwhile, stated it will assess the immediate operational impact in Russia and mentioned it has provisions and indemnifications in place for such scenarios.

The legal dispute is linked to a "performance bond" issued by UniCredit and other banks for a contract between RusChemAlliance and Linde, aimed at building a gas treatment plant. This project has been affected by international sanctions against Russia.

UniCredit operates in Russia through a subsidiary with around 3,100 employees and over 50 branches. Since 2022, the bank has set aside more than €800 million against potential defaults in Russia and reduced its loan portfolio in the country by two-thirds. CEO Andrea Orcel has indicated that while the bank continues to comply with sanctions, a complete exit from Russia remains challenging.

Commerzbank has warned that legal cases in Russia might significantly impact its finances. The hearings for the Gazprom venture's claim against UniCredit have been paused pending another trial in the UK.

The Italian Foreign Ministry and Prime Minister’s office have yet to comment. However, Foreign Minister Antonio Tajani has previously condemned the seizure of assets belonging to Italian companies in Russia. The ministry is expected to address the issue of UniCredit's asset freeze in an upcoming meeting.

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