Foreign banks' assets frozen in Russia amid rising tensions

The arbitration court in St. Petersburg has decided to freeze the assets of several Russian banks, including Deutsche Bank, reports Deutsche Welle. The frozen assets include securities belonging to Deutsche Bank and other firms in which the bank holds shares.

According to the court's decision, the assets of several banks, including Deutsche Bank, have been frozen in response to a request by RusChimAllianz, a subsidiary of Gazprom, which manages the LNG terminal on the Baltic Sea. The company is making claims against Deutsche Bank for a total amount of 238.61 million euros (approximately $251 million) - reports the Tass agency, cited by "Deutsche Welle."

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

Before 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's construction, which these banks had previously helped to guarantee, reports "Deutsche Welle."

RusChimAllianz demands 444 million euros (approximately $467 million) from Unicredit. The freeze affects assets valued at 463 million euros (roughly $488 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 by the bank. Deutsche Bank has created a reserve of around 260 million euros (approximately $274 million) and corresponding assets for returns under the indemnity agreement.

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

In 2021, RusChimAllianz signed a contract with the German industrial giant Linde and the construction company Renaissance Heavy Industries for the facility's construction. 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 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, are Commerzbank, Bayerische Landesbank, and Landesbank Baden-Württemberg. However, unlike Unicredit, these institutions did not have significant 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.

Conversely, companies withdrawing from Russia have to sell their businesses to Russian firms, sometimes at significant discounts.