* Russia drops case against Bank of New York Mellon
* BONY to open renewable 5-yr trade finance facility
* Bank to pay Russia $14 million in legal fees
* Settlement chimes in with thaw in bilateral ties
(Adds background)
By Dmitry Sergeyev
MOSCOW, Oct 22 (Reuters) - Russia has dropped a $22.5 billion lawsuit against Bank of New York Mellon, a judge said on Thursday, in another sign of a thaw in Russia-U.S. ties after the stormy years experienced during George W. Bush's presidency.
Russia had sought compensation from the bank after its former vice president, Lucy Edwards, helped illegally transfer $7 billion out of the country in the late 1990s through Bank of New York accounts.
"The court has examined the Customs Service's request to withdraw the case against the Bank of New York Mellon and the case is closed," judge Lyudmila Pulova said.
The court ruling chimes in with series of positive developments in bilateral ties, including President Barack Obama's decision to scrap plans for an anti-missile system stationed in eastern Europe, which was welcomed by Russia.
Both Obama and his Secretary of State, Hillary Clinton, visited Russia in recent months seeking to "reset" relations, which hit bottom after the conflict in Georgia last year.
Diplomats say the United States now wants better cooperation from the Russians on an array of foreign policy issues such as the U.S.-led war in Afghanistan, Iran, missile defence and the nuclear arms reduction treaty.
The BONY lawsuit, brought by the Federal Customs Service, has been closely watched by investors and clients of the bank, which is the world's largest custodian of financial assets.
"We are very pleased to have this behind us," Bank of New York Mellon's Executive Vice President Matthew Biben told reporters.
Bank of New York Mellon has agreed to pay the Customs Service $14 million in legal fees and open a trade finance credit facility for Russian banks, renewable every 180 days and totalling $4 billion over five years.
"Terms and conditions are to be discussed in bilateral discussions. The rates will be commercial, reasonable rates," Biben said in a statement.
Ivan Marinin from law firm Clifford Chance, which represented BONY in court, said settlement terms were identical to those his legal team had offered a year ago.
(Writing by Gleb Bryanski; editing by John Stonestreet)