VTB filed a lawsuit against its former subsidiary in the EU
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VTB Bank is trying to recover almost €113 million through a Russian court from VTB Bank Europe, which it lost control of in the spring of 2022. We are talking about collecting funds stuck in a correspondent account. However, lawyers clarify, despite the adoption of interim measures, enforcement of the decision in Germany is “virtually impossible.” At the same time, according to experts, the lawsuit may be a stage in VTB’s preparation for participation in the liquidation of Bank Europe SE.
In early September, VTB filed a lawsuit against VTB Bank Europe SE with the intention of collecting a debt in the amount of €112.6 million (about 11.6 billion rubles), as follows from the files of the Arbitration Court of St. Petersburg and the Leningrad Region.
At the request of VTB, on September 14, the court seized as security a number of assets that are in the account of VTB Bank Europe SE in the VTB depository. Among them, in particular, Eurobonds of Russian Railways (47 million CHF at par) and Alfa Holding Issuance (14.15 million CHF), Eurobonds of Astana-Finance ($1.2 million), notes of VEON Holdings BV ($1 million), Eurobonds Gazprom (€14.7 million). The court also seized all securities held in securities accounts in other depositories, up to the amount of the claims (€112.6 million). VTB did not respond to Kommersant’s request.
As follows from the court decision, VTB justified the need for interim measures by the fact that their absence “will make the actual execution of the court decision impossible and will entail causing significant damage to VTB Bank due to the measures taken by the defendant to alienate property in the Russian Federation and the impossibility of executing the court decision in Germany due to for the presence of restrictive measures.”
VTB lost its voting rights in VTB Bank Europe SE in April 2022, following the introduction of EU sanctions against the Russian bank. As a result, VTB suffered a significant loss when the subsidiary bank was written off from its balance sheet. The specific damage to it is not clear, but in 2022, VTB recognized the disposal of both the German VTB Bank Europe SE and the British VTB Capital plc due to sanctions. In total, the disposal of two subsidiaries brought in 209 billion rubles. loss before taxes (see Kommersant-Online, April 5). VTB Bank Europe SE itself began the liquidation process on April 1, 2023.
VTB is recovering from VTB Bank Europe SE funds that have been stuck on its correspondent account in euros and blocked since the sanctions were introduced, notes BGP Litigation partner Sergey Glandin. He clarifies that this is “first of all, the money is not so much from VTB, but from its clients.” “Before the introduction of restrictive measures, VTB Bank Europe SE was a correspondent bank in the euro currency, including for the head office of the Russian VTB,” the lawyer notes.
The claim between credit institutions in this case takes place on the grounds of Art. 248.1 of the APC (the exclusive competence of arbitration courts in the Russian Federation in disputes involving persons in respect of whom restrictive measures have been introduced), Mr. Glandin believes. The adoption of interim measures in such proceedings is not precedent, the expert notes, similar situations arose when the assets of Western debtors were blocked in the Russian circuit. For example, in August, the Moscow Arbitration Court, following an application by Zenit Bank to take interim measures against the Russian subsidiaries of the Swiss banks UBS and Credit Suisse, imposed a ban on the disposal of shares of these banks. In the same month, the court, at the request of FC Otkritie Bank, arrested a stake in Detsky Mir owned by Goldman Sachs, as well as the portfolio of the Goldman Sachs III SICAV fund. At the same time, in August, the court refused to Sberbank, which wanted to arrest 0.57% of the shares of NK Rosneft owned by Glencore Group Funding Ltd or another company of the group.
However, it is now almost impossible to execute a judicial act of the Russian state on German territory, notes banking lawyer Nina Semina. To do this, it will be necessary to go through the procedure for its recognition in a German court. However, the expert clarifies, “given that the bank is in the process of liquidation, this is probably an intermediate step for VTB to ultimately file claims as a creditor.”
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