Frozen Russian funds for Ukraine: Euroclear sees "expropriation" in risky investment attempt – FT

The plan to increase profitability by investing in risky investments, as a way to attract more funds for Ukraine, is almost equivalent to the “expropriation” of Russian assets. This is according to Valérie Urbain, CEO of Euroclear, the company that owns most of the assets linked to the Russian Federation.

UNN writes with reference to Financial Times.

DetailsThe European Commission is considering how to get more benefit from the assets of the Russian central bank. Currently, this involves an amount of about 191 billion euros, which are “under the care” of the Euroclear clearing center, due to previously imposed Western sanctions against Russia’s aggressive policy.

If you increase returns, you increase risks. And who bears that risk?

How to generate higher returns from frozen Russian fundsEuroclear reinvests funds received from the redemption of Russian assets – such as coupon payments and redemptions – primarily through central banks.

The G7 uses the profits to support a $50 billion loan to Kyiv.

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Profits from these assets are decreasing as the European Central Bank has lowered its interest rate. But a way out has been found, namely:

Transfer funds to riskier asset classes that can generate higher returns but also carry a greater risk of loss.

Urbain warned that someone would have to cover such potential losses.

Systemic risk will certainly increase sharply if we have to go beyond the risk profile we have and which is approved by our supervisors

Urbain also warned:

If a “special purpose vehicle” is to be created to which Russian central bank assets will be transferred, and these funds will be invested in riskier investments, then the corresponding scheme will create “many risks for Euroclear and for European markets in the world.”

She warned that the scheme could be viable if “in the event of any restitution claim from the Russian central bank, the assets disappear, and someone covers that amount.”

For referenceEuroclear faces more than 100 lawsuits regarding frozen Russian assets, including those belonging to oligarchs and other sanctioned entities.

According to sources close to Euroclear, Russia has confiscated assets worth 33 billion euros belonging to Euroclear clients that were frozen in Russia’s equivalent of Euroclear, the central securities depository in Moscow.

AdditionSeparately, Valérie Urbain announced that Euroclear aims to promote EU initiatives to integrate the bloc’s fragmented capital markets.

She said Euroclear would offer a “single point of access” for retail and institutional investors in the 27 EU member states.

Urbain also stated that she advocates for more harmonized supervision of central securities depositories.

RecallRussia is trying to return 300 billion dollars of frozen assets, offering countries to buy goods in exchange for aid. Zelensky said that Europe is not going to give them back.

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