Thursday June 20, 2024

Russia freezes Deutsche Bank assets after sanctions halt a project

Published : 18 May 2024, 20:29

  DF News Desk
The Deutsche Bank logo is pictured above the entrance of a branch in Oldenburg city center. File Photo: Hauke-Christian Dittrich/dpa.

An arbitration court in St Petersburg has frozen the assets of several banks in Russia, including Deutsche Bank, after the planned construction of a terminal, which the German bank had helped to guarantee, was cancelled, reported dpa.

The court action was taken at the request of RusChimAllianz, a Gazprom subsidiary operating an LNG terminal on the Baltic Sea.

The company is claiming €239 million against Deutsche Bank, according to a report by the Russian state news agency Tass on Saturday.

The assets blocked are securities belonging to Deutsche Bank and other companies in which it holds an interest, as well real estate and money in bank accounts. This represents only part of the bank's assets in Russia.

The court had previously also frozen bank accounts and assets of the Italian bank Unicredit in Russia. Other lenders are also affected.

The move comes after a terminal construction was cancelled due to Western sanctions. The banks had helped to guarantee the project.

RusChimAllianz wants €444 million from Unicredit. Assets worth €463 million are to be frozen.

Deutsche Bank stated that it remains to be seen how this decision will be implemented by the Russian courts and what consequences this will have for the bank's operations in Russia.

"We see ourselves as fully protected by an indemnification from a client," the bank said in a statement.

The bank has provided a provision of around €260 million and "a corresponding reimbursement asset under the indemnification agreement," it said.

Unicredit is the largest foreign bank still active in Russia after Germany's Raiffeisenbank, and by its own estimation is one of the 20 largest banks in the country in terms of balance sheet assets.

RusChimAllianz had concluded a contract in 2021 with the German industrial group Linde and the construction company Renaissance Heavy Industries for the construction of the plant. RusChimAllianz reportedly paid an advance to Linde for this.

After Russia invaded Ukraine in February 2022, the West imposed sanctions. Linde has reportedly informed its client that the work has been stopped.

The banks that had acted as guarantors for the deal also withdrew their guarantees due to the sanctions. In addition to Deutsche Bank and Unicredit, Commerzbank, Bayerische Landesbank and Landesbank Baden-Württemberg were also sued before the arbitration court in St Petersburg.

Unlike Unicredit, however, these companies did not have major branches in Russia.

German companies have lost billions in investments in Russia as a result of the sanctions.