Unicredit questions ECB’s order to cut operations in Russia

UniCredit has the second-biggest exposure to Russia among western banks. (Photo by Jeff Tumale)

Italian bank Unicredit has filed a legal challenge questioning terms set by the European Central Bank for reducing its operations in Russia.

Unicredit said it had applied to the EU’s General Court to seek clarification on the ECB’s request for it to speed up its withdrawal from the country.

It asked for the request to be frozen while its application is being heard, with the bank saying it wanted to avoid potential “serious unintended consequences”.

Unicredit argued that complex regulatory landscape, involving Western sanctions and local Russian laws applying to its retail bank in the country, meant it needed to “seek clarity and certainty” on the actions it had to take.

Italy’s Foreign Minister Antonio Tajani welcomed the complaint. “Hasty decisions merely risk damaging Italian and EU companies,” he added.

The ECB has put pressure on several eurozone banks with remaining operations in Russia in recent months, asking for European lenders to provide a “clear roadmap” for their exit.

Unicredit, which has the second-largest exposure to Russia among Western banks, said progress in shrinking its Russia business showed the bank was “fully aligned with ECB on the importance of reducing its presence”.

However, it flagged: “concerns about the terms upon which this reduction has to take place as provided for in the decision issued by ECB, that goes beyond the current legal framework”. The ECB declined to comment on Unicredit’s challenge.

Western sanctions against Moscow since its invasion of Ukraine have meant European banks are faced with fewer potential buyers. Their exit must be approved by Vladimir Putin under restrictions imposed by Moscow, also requiring a green light from Russia’s central bank.

The largest western banks that still operate in Russia paid more than €800m (£684m) in taxes to the Kremlin last year.