Italy’s UniCredit has asked the bloc’s top court to review the ECB’s request

UniCredit has appealed to the EU’s top court to clarify an order issued by the European Central Bank (ECB) for the Italian institution to reduce its presence in Russia.

The lender has applied to the General Court of the European Union for “definitive legal clarification” of obligations set by the ECB for winding down its Russian business, UniCredit said in a statement on Monday.

UniCredit said that while it is complying with the regulator’s request to slash its activities in Russia, it is concerned “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 has pressured EU banks with operations in Russia to speed up their exit from the country amid the threat of harsher US sanctions on Moscow over the conflict in Ukraine.

In May, the Frankfurt-based regulator sent letters to lenders with a request for an “action plan” to end their business in Russia as early as June.

UniCredit currently has the second largest exposure to the Russian market among EU-based banks, and is included in the Russian central bank’s list of 13 systemically important credit institutions. Other EU banks – including Austria’s Raiffeisen Bank International (RBI), Dutch lender ING, Germany’s Commerzbank and Deutsche Bank, Hungary’s OTP Bank, Italy’s Intesa SanPaolo, and Sweden’s SEB – also maintain a presence in the Russian market despite Western sanctions.

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ECB tells banks to ‘get out of Russia’

Announcing its legal challenge, the bank noted that it had reduced its cross-border exposure to Russia by 91% and its domestic exposure by 65% since February 2022.

The Italian lender said the application could take several months and asked for an interim suspension of the regulator’s decision.

“Unprecedented circumstances, the complexities inherent in the geo-political and economic scenario and the lack of a harmonized regulatory framework applicable to it and the potential for serious unintended consequences of implementing the decision that would impact not only the Russian subsidiaries” compelled UniCredit to seek clarity.

Italian Foreign Minister Antonio Tajani welcomed the bank’s challenge, saying the ECB “must take into account the situation in which Italian companies operate in Russia, in compliance with EU sanctions.”

“Hasty decisions merely risk damaging Italian and EU companies,” Reuters quoted him as saying.

UniCredit operates in Russia through a subsidiary, with some 3,100 employees and more than 50 branches.