The Bank of New York Mellon said on Tuesday it will meet with the Russian government to discuss settlement of a $22.5 billion lawsuit Russia has levelled against it.
The government, prompted by its need to raise money and cut expenses amid the economic turmoil, is ready to settle the case for $800 million, Kommersant reported on Tuesday.
"We are talking about a political decision, which is fully logical in a period of global financial crisis," the business daily quoted a source in Prime Minister Vladimir Putin's government as saying.
In response to the report, the bank said in a statement it was encouraged by the invitation and looked forward to meeting with the government. It added, however, that any settlement would have to reflect the "meritless nature of the claims". A source close to the bank said the meeting should be arranged in the coming weeks.
Since May 2007, Russia has been seeking compensation from the U.S. bank after a former vice-president helped transfer $7 billion out of Russia in the late 1990s through Bank of New York accounts.
The U.S. bank rejected an initial offer to settle for $600 million before the case was filed in 2007. A bank spokesman declined to comment on the settlement value of $800 million reported by Kommersant.
The next hearing of the case is scheduled for March 10.
ORDER TO SETTLE
According to the report, Sergei Sobyanin, Putin's chief of staff, had ordered that the case be settled out of court.
The offer comes as Russia faces a budget deficit of 8 percent this year, as well as the need to raise cash and focus spending on emergency aid to Russian companies, many of which are reeling from the effects of the financial crisis.
Its ability to collect any damages has also been disputed.
The bank vowed in April that it would use all its legal resources to resist the enforcement of a ruling against it. This would force Russia into a lengthy and expensive process of trying to seize the bank's assets all over the world.
"The Bank of New York does not have accounts on Russian territory that we could make a claim upon," the government source told Kommersant.
Although the bank has rebuffed previous offers to settle, it said on Tuesday the lawsuit is not in Russia's interest or the bank's and should be resolved.
The judge hearing the lawsuit has repeatedly called for it to be settled out of court, as it has dragged on for some 21 months and posed major expenses for both sides.
