UniCredit and other European banks are facing significant legal challenges in Russia related to guarantees for a gas processing plant project that was halted due to Western sanctions. UniCredit's Russian subsidiary, AO Bank, sued its German parent in a Moscow court over counter-guarantee agreements that UniCredit Germany could not honor due to sanctions. This resulted in a Russian court order in October for UniCredit's German unit to pay guarantees plus interest, an appeal against which was rejected in January 2025. These cases led UniCredit to book $580 million in provisions for legal risks last year, a substantial increase from $68 million in 2023.
The disputes stem from a guarantee package UniCredit Germany issued for its client, Linde, which was building a gas processing plant for RusChemAlliance, a joint venture 50% owned by Gazprom. When Western sanctions forced Linde to halt work, RusChemAlliance sought to draw down guarantees from UniCredit Germany. When UniCredit refused to honor them due to sanctions, a Russian court in St. Petersburg enforced the payments. Subsequently, AO Bank, having made payments to RusChemAlliance, then sued UniCredit Germany to recoup the money based on counter-guarantee agreements.
Separately, a Russian court ordered UniCredit to pay $479.44 million in a lawsuit initiated by RusChemAlliance over the aborted gas project. This judgment followed an earlier seizure of UniCredit's assets in Russia, including $462.7 million in securities, real estate, and accounts, as well as shares in its Russian subsidiaries. UniCredit subsequently agreed to pledge Russian OFZ treasury bonds worth approximately $574 million. Other banks involved as guarantors, including Deutsche Bank and Commerzbank, have also seen their assets seized by Russian courts in similar lawsuits filed by RusChemAlliance, with Deutsche Bank provisioning around $259 million for its case.
The situation highlights the ongoing risks for European banks with operations in Russia amidst the Ukraine conflict and associated sanctions. UniCredit's CEO, Andrea Orcel, had previously aimed for a fair price to exit the Russian business, but the current legal battles underscore the difficulties. English courts have previously issued anti-suit injunctions against RusChemAlliance on behalf of several banks, including UniCredit, preventing them from pursuing cases in Russia, though UniCredit has noted the practical impossibility of enforcing such injunctions given RusChemAlliance's lack of assets outside Russia.
