Bank of New York Mellon may restart trade-finance lending to Russia as a part of an out-of-court settlement of a $22.5 billion lawsuit against the bank, Kommersant business daily and the Wall Street Journal reported on Monday.

For more than two years, Russia has been seeking compensation from the U.S. bank after a former vice-president, Lucy Edwards, admitted to helping to launder $7 billion from Russia in the late 1990s through Bank of New York accounts.

The settlement could come before the next hearing, slated for October 20, according to The Wall Street Journal, citing a person close to the talks.

The bank made this proposal late August as a part of preparing amicable settlement with Russian Customs Service. It is suggested the financing will be provided through $400 million tranches every 180 days, a source in Russia's Finance Ministry was quoted as saying.

Bank of New York's exposure will be no more than $400 million, renewed every six months over five years, the person familiar with the talks told the WSJ. Russian media had reported the loan would be $4 billion.

The credit line would bear an interest rate of 2.5 percent over LIBOR and the final recipients of the funds would be Russian banks selected by the government.

The state banks would use the money to help fund imports and exports, the Journal reported.

A spokesman for the bank in New York declined to comment on the case.

A Finance Ministry official told Kommersant it received the bank's proposal for the expertise a couple of weeks ago but declined to comment further.

For more than two years, the case had been bogged down in procedural issues, mainly over jurisdiction, and had not moved into arguing the merits of the case at the time the settlement talks began.

Settlement talks began in March 2009 after the Russian government called the bank to the table. But the two sides voiced radically different opinions on how much it should cost to end the case, ranging from $1.5 million to close to $1 billion.

(Reporting by Dmitry Sergeyev, additional reporting by Elinor Comlay in New York; editing by Simon Jessop, Bernard Orr)

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