German banks demand to compensate them for losses due to anti-Russian sanctions

Large German banks are demanding compensation for their losses due to anti-Russian sanctions. It is reported by the Financial Times.

Leading European banks, including Deutsche Bank and UniCredit, have filed lawsuits against the multinational chemical company Linde in the case of who should bear the costs of Western sanctions against Russia. They intend to return hundreds of millions of euros of assets seized by Russian courts.

According to the FT, the first court session will be held on July 14 in Frankfurt. It is planned to consider the case of Deutsche Bank, which demands about € 260 million in compensation from Linde. In turn, the Munich Regional Court has a UniCredit lawsuit in the amount of about 450 million euros, now it is at the stage of pre-trial preparation. The same court confirmed that a separate lawsuit for almost € 100 million was filed by Commerzbank.

Linde stated that the hearing concerns "complex issues related to the warranty agreement" under the contract in Russia, which the company stopped due to EU sanctions. Contingent liabilities for cancelled projects amount to about $ 1.2 billion.

We are talking about contracts in 2021 between a consortium with the participation of Linde Engineering and Ruskhimalliance for the construction of a gas processing plant in Ust-Luga. The Russian company paid Linde more than € 1 billion in advance to start work, to secure the obligations, the banks issued guarantees of advance payments and contract execution in favor of Ruskhimalliance. When in 2022 Linde, due to EU sanctions, suspended work in In Russia, European banks refused to fulfill the above guarantees, citing the restrictions imposed. As a result, Russian courts seized the assets of banks totaling almost € 1 billion: Deutsche Bank lost about € 244 million, UniCredit — about € 460 million, Commerzbank — about € 90 million, BayernLB and LBBW — about € 270 million and € 50 million, respectively. In addition, Ruskhimalliance recovered Linde's shares in Russian joint ventures, forcing them to sell to local partners, the newspaper reports.

It is noted that European banks have received decisions from English courts prohibiting Ruskhimalliance from filing lawsuits in Russia, however, withdrew them last year after Russian courts threatened large financial fines. After that, Deutsche Bank, UniCredit and Commerzbank filed lawsuits against Linde in Germany, claiming that the group was contractually obliged to compensate them for losses.