The Bank of New York Mellon is reportedly close to settling a $22.5 billion lawsuit Russia’s Federal Customs Service brought against it in Moscow. Russia is seeking payment from the bank to compensate for the $7 billion a former bank vice president admitted to helping launder out of Russia through Mellon accounts in the late 1990’s.
The agreement reportedly requires Mellon to pay an estimated $14 million in court costs and to lend hundreds of millions to Russian state banks.
WSJ: The proposed lending isn’t explicitly linked to the case, according to people close to the discussions, but would begin after any settlement, resuming business that the bank suspended as the case heated up in recent years. Under discussion is a $400 million trade-finance facility to be available to Russian state banks to help fund imports and exports. Renewable every 180 days, it would run for five years, which led some Russian news reports to total it and refer to a $4 billion loan. A person close to the talks said the bank’s exposure would be no more than $400 million and pricing would be done at market terms.
Reuters has the lending amount at the $4 billion figure. Either way the settlement is a far cry from the reported $1 billion settlement Russia demanded in March, according to Reuters. The bank has always insisted the lawsuit is “meritless.”
Interestingly, the case was filed by Miami attorneys and is the first time a party has sought to enforce U.S. racketeering laws in Russian courts, the WSJ said.
Any settlement must be approved by the Russian government.