German banks' assets frozen in Russia amid legal battles

According to the decision of the arbitration court in St. Petersburg, the assets of several banks operating in Russia have been frozen. Among them is Deutsche Bank. This decision was in response to a request filed by RusChimAllianz, a subsidiary of Gazprom, which manages the LNG terminal on the Baltic Sea. The company is making claims against Deutsche Bank for €239 million (approximately £207 million) - reported by the Tass agency, cited by "Deutsche Welle".

The frozen assets include securities belonging to Deutsche Bank and other firms in which the bank holds shares. Real estate and financial funds held in bank accounts have also been frozen. However, this constitutes only a part of Deutsche Bank's assets in Russia.

Prior to this decision, the arbitration court also froze the bank accounts and assets of the Italian bank Unicredit and other credit institutions operating in Russia. The reason for this decision was the sanctions imposed by the West and the cancellation of the terminal construction, which these banks had previously helped to guarantee—reports Deutsche Welle.

RusChimAllianz demands €444 million (approximately £384 million) from Unicredit. The freeze affects assets valued at €463 million (approximately £401 million). Deutsche Bank issued a statement saying it is still unclear how the Russian courts will implement the court's decision and what consequences this will have for the bank's operations in Russia.

"Deutsche Bank believes the indemnity agreement with its client fully covers it," reads a statement from the bank. Deutsche Bank has created a reserve of around €260 million (approximately £225 million) and corresponding assets for returns under the indemnity agreement.

After Raiffeisenbank, Unicredit is the largest foreign bank still active in Russia. In terms of balance sheet assets, it is also among the 20 largest banks in the country.

In 2021, RusChimAllianz signed a contract with the German industrial giant Linde and the construction company Renaissance Heavy Industries to build the facility. RusChimAllianz was to pay Linde an advance for this. However, after Vladimir Putin's war against Ukraine began, the West imposed sanctions. At that time, the Linde company informed its client that the work had been halted. The banks that were guarantors of the contract also withdrew due to the sanctions.

"Dw" points out that among the defendants before the arbitration court in St. Petersburg, besides Deutsche Bank and Unicredit, there are also Commerzbank, Bayerische Landesbank, and Landesbank Baden-Württemberg. However, unlike Unicredit, these institutions did not have large branches in Russia. As a result of the sanctions, German companies lost billions invested in Russia.

Russia is increasingly retaliating for the sanctions imposed by Western countries. Many companies had to accept the confiscation or seizure of assets, and new managers were appointed in the Russian subsidiaries - it reads.

On the other hand, companies withdrawing from Russia have to sell their businesses to Russian firms, sometimes at significant discounts.