Russia Seizes Assets of Major European Banks

Written by Henrik Rothen

May.19 - 2024 9:19 AM CET

Russian authorities seize assets of major European banks’ subsidiaries amid escalating tensions.

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Russian authorities have begun seizing assets of European banks’ subsidiaries that continued operations in Russia after the war with Ukraine commenced. This is reported by Moscow Times.

Unicredit Bank's Assets Frozen

On Friday, May 17, the St. Petersburg and Leningrad Region Arbitration Court ordered the seizure of assets belonging to Unicredit Bank, a subsidiary of Italy's largest banking group, Unicredit.

The frozen assets include securities, real estate, and accounts valued at €462.7 million.

German Banks Targeted

The following day, May 18, the court imposed similar measures on two German banks: Deutsche Bank and Commerzbank. Deutsche Bank saw its 100% stake in its Russian subsidiary and Deutsche Bank Technology Center, along with accounts, securities, and real estate worth €238.6 million, frozen.

Commerzbank's frozen assets totaled €93.7 million, affecting its 100% stake in its Russian subsidiary (Commerzbank Eurasia), as well as securities and cash holdings.

These seizures stem from a lawsuit by RusKhimAlliance, a subsidiary of Gazprom, responsible for constructing a massive gas chemical complex in Ust-Luga. The company accuses these European banks of failing to honor bank guarantees for the project, intended to process 45 billion cubic meters of gas annually.

RusKhimAlliance had contracted German conglomerate Linde for the $40 billion project, but work halted due to the war and subsequent sanctions, leaving advance payments in limbo. Linde's failure to proceed was described as "unpartnerlike" by Alexander Drozdenko, the governor of Leningrad Region. He admitted that the project's launch would be delayed by at least two years, pushing the start date from 2024 to 2026.

Impact on European Banks

The asset seizures have hit some of the largest banking entities in Russia. Unicredit, among the top 20 in Russia by assets, had planned to downsize its Russian business post-invasion. Despite this, its Russian subsidiary generated €890 million last year, nearly 8% of its pre-tax profit.

Commerzbank had reduced its Russian assets fivefold over two years but still held about €400 million in Russia as of early 2024, including investments in securities, loans, and cash in the Central Bank of Russia.

Deutsche Bank, despite reducing its Russian staff mainly by closing its IT hub, reported higher profits from its Russian market in 2023 compared to 2021.

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