Euro zone banks still involved with Russia more than two years after Moscow invaded Ukraine have come under growing pressure in recent weeks from the bloc's supervisors, as well as U.S. authorities, over their ties to the country.
The European Central Bank has written to European lenders to demand a "clear roadmap" to exit the Russian market. In May, Bank of Italy Governor and ECB policymaker Fabio Panetta said Italian banks "have to get out" because of reputational risks.
UniCredit said in a statement that progress made so far to shrink its Russia business showed it was "fully aligned with ECB on the importance of reducing its presence in Russia".
However, it has "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.
After Austria's Raiffeisen (RBIV.VI), UniCredit has the biggest exposure to Russia, where it runs a top 15 commercial bank, among European banks.
Raiffeisen has no plans to take legal action against the ECB over the request to reduce its Russia-related business, a spokesperson told Reuters on Monday.
"For anyone who believes that Ukraine's fight against Russia is important for the security of Europe, the fact that UniCredit stayed in Russia, made profits, and is now suing the ECB over their attempts to get it to leave, this doesn't look good," said Nicolas Veron of Brussels think tank Bruegel.
UniCredit has so far cut its cross-border exposure to Russia by 91% and the local exposure by 65%, with "further substantial reductions" planned.
European banks still active in Russia have also been facing pressure from the United States.
Treasury Secretary Janet Yellen told Reuters in May that the lenders faced "an awful lot of risk" and Washington was looking at stronger secondary sanctions on banks found to be aiding transactions for Russia's war effort.
"While this application is being heard, UniCredit has requested an interim suspension of the (ECB's) decision pending the proceeding," UniCredit said.
Western sanctions against Russia have complicated European banks' exit efforts by curtailing the number of potential buyers. Under restrictions imposed by Moscow, an exit is now conditional on approval by President Vladimir Putin.
Russia's central bank must also give a green light.
Highlighting the difficulties, another Italian lender Intesa Sanpaolo (ISP.MI) is still to finalise its exit, despite securing the presidential decree authorising it to dispose of its Russian assets last September.
