Italian bank ordered to pay $480mn over scrapped Russian d

01 Jul, 2024

Italian bank ordered to pay $480mn over scrapped Russian d

UniCredit was among the guarantors for a failed gas plant project involving Gazprom and Germany's Linde.

A Russian court has ordered Italy's UniCredit bank to pay $448.2 million (approximately $479.44 million) over an aborted joint venture between Russian energy giant Gazprom and Germany's Linde, according to a court document. UniCredit was a guarantor lender for the deal to build a gas processing plant in Ust Luga, near St. Petersburg, through a joint venture called RusChemAlliance, which is 50% owned by Gazprom. The project was canceled due to Western sanctions imposed over the Ukraine conflict.

The St. Petersburg-based RusChemAlliance filed a lawsuit seeking compensation from UniCredit for allegedly failing to fulfill its obligations when the deal collapsed. "The claim is satisfied in full," stated the St. Petersburg Arbitration Court in a filing. Linde, a German industrial and engineering company, had agreed with RusChemAlliance to build the plant in 2021. However, the company withdrew from the contract following the Ukraine conflict, citing compliance with Western sanctions as noted in a 2022 company report.

Last month, the Arbitration Court of St. Petersburg and Leningrad Region took interim measures on the RusChemAlliance claim against UniCredit. Although the Italian bank requested the process be canceled, the court ruled to seize property and assets worth $462.67 million (approximately $494.4 million) from UniCredit's business in Russia. UniCredit stated in May that the seizure affected only a fraction of its Russian unit's assets, not the entire subsidiary.

UniCredit is one of the few EU lenders that continues to operate in Russia after several foreign banks exited the country due to Western sanctions related to the Ukraine conflict. A subsidiary of the Italian bank facilitates euro payments to and from Russia and is listed among the Russian central bank's 13 systemically important credit institutions. The Russian court's decision comes after the EU imposed its 14th round of sanctions targeting Russian liquefied natural gas (LNG) earlier this month. Brussels has prohibited the re-export of Russian LNG via the EU, although deliveries for use within the EU remain unaffected.