(Bloomberg) -- UniCredit SpA “prudentially set aside” €228 million ($247 million) of funds related to the decision by a Russian court to seize assets in the country, Chief Executive Officer Andrea Orcel said in an interview.
Italy’s second-biggest lender accounted for the funds in the second quarter earnings under “other charges and provisions.” “Part of the provisioning was mitigated by the release of funds in the country,” the CEO said.
In May a Russian court froze more than €460 million of UniCredit’s local assets as part of the suit brought by RusKhimAlians related to a Gazprom PJSC venture. The court also seized assets from Germany’s Deutsche Bank AG and Commerzbank AG as part of the same suit, Bloomberg reported at the time.
UniCredit has so far eschewed the kind of full-scale exit from Russia conducted by Societe Generale SA. The lender is proceeding with a plan to cut the Russian cross-border exposure to zero by the end of next year. Since the beginning of the war, the Milan-based lender has cut its exposure by 93% and its local loans by 68%, it said in a slide presentation.
The European Central Bank has been pushing the region’s lenders to pull back from Russia. Earlier this month, UniCredit applied to the General Court of the European Union for “definitive legal clarification” of obligations set by the European Central Bank for winding down its Moscow-based division.
It stating that while it is aligned with the regulator on the need to shrink its Russian business, it has concerns that some of the terms could have “serious unintended consequences” that would impact the whole bank.
Orcel said on Wednesday that UniCredit has the same ultimate goal as the ECB. “We have sought legal clarity from the European court of justice to protect UniCredit from unnecessary risks, including potentially providing Russia with a justified motive to intervene and take control of our local assets,” Orcel added during a conference call.
“We aim to do that through an orderly accelerated solvent wind-down of our activities there,” the CEO said. “Whatever will be the outcome of the court it will be a win-win for UniCredit, as it gives legal certainty for the bank on the consequences of its actions,” Orcel said.
Orcel also praised the ECB’s recent openess to further clarify their request, and said the bank remains willing to withdraw its filing to the court if clarifications “provide us with a necessary legal comfort.”
The lender operates in Russia through its AO UniCredit Bank subsidiary, which offers services to corporate and individual clients. It has more than 3,000 employees and more than 50 branches.
(Updates with CEO comments from analyst call in seventh paragraph.)
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