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ECB urges banks to leave Russia as assets are seized

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The European Central Bank (ECB) is urging European banks with operations in Russia to withdraw as quickly as they can for two reasons: 1) they could be hit by US sanction measures and 2) Russia has begun to seize assets.

The ECB has written to lenders in recent weeks asking for detailed plans on their exit strategies. Lenders need to provide the regulator with an “action plan” for their Russian business as early as June, according to reports.

Last week, Austria’s Raiffeisen Bank International was forced to abandon a deal to swap assets in Russia for ones in Europe after pressure from US authorities. The US intervention has led to concern at the ECB that RBI and other lenders could be targeted in future crackdowns.

Also last week, a Russian court seized over €700 million of assets belonging to three western banks — UniCredit, Deutsche Bank and Commerzbank — according to court documents.

The seizure is one of the biggest moves against western lenders since Moscow’s invasion of Ukraine prompted most international lenders to withdraw or wind down their businesses in Russia.

The moves follow a claim from RusChemAlliance, a subsidiary of Gazprom. The court seized €463 million of assets belonging to Italy’s UniCredit, equivalent to about 4.5% of its assets in the country.

Frozen assets include shares in subsidiaries of UniCredit in Russia as well as stocks and funds it owned, according to the court decision that was dated May 16th and was published in the Russian registrar on Friday.

According to another decision on the same date, the court seized €238.6 million of Deutsche Bank’s assets, including property and holdings in its accounts in Russia.

The court also ruled that the bank cannot sell its business in Russia; it would already require the approval of Vladimir Putin to do so.

The court agreed with RusChemAlliance that the measures were necessary because the bank was “taking measures aimed at alienating its property in Russia”.

The court decided to seize Commerzbank assets, but the details of the decision have not yet been made public so the value of the seizure is not known.

RusChemAlliance asked the court to freeze up to €94.9 million of the lender’s assets.

“The ECB’s response to the US interventions shows the big dependency of Europe on the US,” said an adviser to the banks with Russian subsidiaries in a comment to the FT.

“We are more followers than leaders on judgments involving European companies.”

The person briefed on the ECB’s position said supervisors there wanted to avoid European banks facing a similar fate as ABLV, a Latvian bank that was shut down after the US Treasury department accused it of “institutionalised money laundering” as well as breaches of North Korean sanctions and cut off its access to the US financial system in 2018.

 

Source: Payments Cards and Mobile

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