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A St Petersburg court has seized over €700mn-worth of assets belonging to three western banks — UniCredit, Deutsche Bank and Commerzbank — according to court documents.

The seizure marks one of the biggest moves against western lenders since Moscow’s full-scale invasion of Ukraine prompted most international lenders to withdraw or wind down their businesses in Russia. It comes after the European Central Bank told Eurozone lenders with operations in the country to speed up their exit plans.

The moves follow a claim from Ruskhimalliance, a subsidiary of Gazprom, the Russian oil and gas giant that holds a monopoly on pipeline gas exports.

The court seized €463mn-worth of assets belonging to Italy’s UniCredit, equivalent to about 4.5 per cent of its assets in the country, according to the latest financial statement from the bank’s main Russian subsidiary.

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 16 and was published in the Russian registrar on Friday.

According to another decision on the same date, the court seized €238.6mn-worth 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 Rukhimallians that the measures were necessary because the bank was “taking measures aimed at alienating its property in Russia”.

On Friday, 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. Ruskhimalliance asked the court to freeze up to €94.9mn-worth of the lender’s assets.

The dispute with the western banks began in August 2023 when Ruskhimalliance went to an arbitration court in St Petersburg demanding they pay bank guarantees under a contract with the German engineering company Linde.

Ruskhimalliance is the operator of a gas processing plant and production facilities for liquefied natural gas in Ust-Luga near St Petersburg. In July 2021, it signed a contract with Linde for the design, supply of equipment and construction of the complex. A year later, Linde suspended work owing to EU sanctions.

Ruskhimalliance then turned to the guarantor banks, which refused to fulfil their obligations because “the payment to the Russian company could violate European sanctions”, the company said in the court filing.

The list of guarantors also includes Bayerische Landesbank and Landesbank Baden-Württemberg, against which Ruskhimalliance has also filed lawsuits in the St Petersburg court.

UniCredit said it had been made aware of the filing and “only assets commensurate with the case would be in scope of the interim measure”.

Deutsche Bank said it was “fully protected by an indemnification from a client” and had taken a provision of about €260mn alongside a “corresponding reimbursement asset” in its accounts to cover the Russian lawsuit.

“We will need to see how this claim is implemented by the Russian courts and assess the immediate operational impact in Russia,” it added.

Bayerische Landesbank and Landesbank Baden-Württemberg both declined to comment. Commerzbank did not immediately respond to a request for comment.

Italy’s foreign minister has called a meeting on Monday to discuss the seizures affecting UniCredit, two people with knowledge of the plans told the Financial Times.

UniCredit is one of the largest European lenders in Russia, employing more than 3,000 people through its subsidiary there. This month the Italian bank reported that its Russian business had made a net profit of €213mn in the first quarter, up from €99mn a year earlier.

It has set aside more than €800mn in provisions and has significantly cut back its loan portfolio. Chief executive Andrea Orcel said this month that while the lender was “continuing to de-risk” its Russian operation, a full exit from the country would be complicated.

The FT reported on Friday that the European Central Bank had asked Eurozone lenders with operations in the country for detailed plans on their exit strategies as tensions between Moscow and the west grow.

Legal challenges over assets held by western banks have complicated their efforts to extricate themselves. Last month, a Russian court ordered the seizure of more than $400mn of funds from JPMorgan Chase following a legal challenge by Kremlin-run lender VTB. A court subsequently cancelled part of the planned seizure, Reuters reported.

Additional reporting by Martin Arnold in Frankfurt

The US Department of the Treasury this week released its 2024 report on illicit finance, examining threats of money laundering and terrorist financing and its strategies to combat them.

The Treasury cited professional money launderers, financial fraudsters, cybercriminals and those seeking to finance terrorism as ongoing threats to the US financial system.

The 44-page report said anti-money laundering/countering the financing of terrorism (AML/CFT) efforts must continue to adapt in order to be effective.

Among the vulnerabilities cited were obfuscation tools and methods such as mixers and anonymity-enhancing coins, AML/CFT compliance deficiencies at banks and complicit professionals who help facilitate illicit financial activity.

The Treasury cited the prosecution of Binance as an example of its success in supervising virtual asset activities.

Binance failed to prevent criminals, sanctioned entities, and other bad actors from laundering billions of dollars in dirty money, according to court papers. The company pleaded guilty and agreed to pay $4.3 billion in fines and restitution, DL News reported.

Additionally, Binance co-founder Changpeng Zhao was sentenced to four months in federal prison for violating US banking laws and fined $50 million.

The US must continue “to invest in technology and training for analysts, investigators, and regulators to develop further expertise related to new technologies, including analysis of public blockchain data,” the report said.

Such expertise is crucial to the government’s ability to develop responses to new ways in which criminals misuse “virtual assets and other new technologies to profit from their illicit activity,” it said.

SAN BERNARDINO, Calif. (KABC) — The former finance director of the city of San Bernardino is alleging she was threatened and fired by the current city manager, after raising concerns about the potential cost of a project to renovate the old city hall building.

Barbara Whitehorn made the allegations during the public comment portion of the city council meeting on May 15.

“I came back from vacation today, and I was fired today,” said Whitehorn, at times tearing up while making her statement. “I am no longer in the employ of the city of San Bernardino after being threatened today (by the city manager) of having information damaging to my career released into the public domain.

“Then after saying, ‘Please do so, Mr. city manager, because you’ll have to fire me before doing that, he said, ‘Oh, then I’ll just fire you without cause.’”

Whitehorn alleges that the costs to retrofit the old city hall building are spiraling out of control. The building has sat empty since late 2016 after being vacated over concerns that it could collapse during a big earthquake.

“It’s a project that has expanded from $80 million to about $120 million and that number is nowhere to be seen on this (public) agenda. This city does not have that money,” she said.

A presentation was made to the city council in January 2024 outlining the process by which city hall would be retrofitted. City manager Charles Montoya said the city is currently incurring increasing costs for leasing space in separate buildings to maintain city services.

“If we don’t do this now, sooner or later that building is just going to become a gigantic door stop,” said Montoya during the meeting.

He acknowledged when asked by city council members that there is no projected final cost for the project yet.

“The reason we’re doing it this way is speed, to get this thing done. Our lease in the city building is up in two years; we don’t want to sign another lease where we’re just throwing money out the window.”

Two days after her appearance before the council, the city released a statement in response to Whitehorn’s remarks.

The statement claimed Whitehorn was fired for reasons unrelated to the city hall project and disputed some of her other claims.

“However, contrary to Whitehorn’s claims, the renovation project has yet to be designed, and construction costs have yet to be determined,” read the statement, attributed to Public Information Officer Jeff Kraus. “Construction cost estimates and project financing options will be presented to the Council during future meetings.”

“The City of San Bernardino has confirmed that Whitehorn was an at-will employee and was terminated for cause involving financial issues that were unrelated to the City Hall project.”

The statement also said discussion of the city hall project was postponed from that night’s council agenda because there was not enough time to consider the matter and hear from the public.