The Central Bank of Russia announced on Thursday that it intends to seek compensation from European banks following the immobilization of billions of Russian sovereign assets by officials in Brussels, which are expected to be used to finance aid for Ukraine.
“In light of the continuous efforts by EU authorities to unlawfully confiscate or use, without the consent of the Bank of Russia, its assets stored in European financial institutions… the Bank of Russia, adhering to its previously stated commitment to protect its interests, declares its intention to pursue reparations from European banks in Russian arbitration courts,” the regulator stated in its announcement.
“The compensation sought will reflect the value of the assets that have been unlawfully frozen and used, along with the associated lost earnings,” it noted, although it did not specify which banks it plans to take legal action against.
This action represents Russia’s latest response to the prolonged immobilization of approximately 210 billion euros ($246.5 billion) in Russian sovereign assets. European leaders convened in Brussels on Thursday for a crucial summit to discuss the potential use of those frozen assets to support a reparations loan aimed at providing Ukraine with 90 billion euros over two years.
Recently, the Central Bank of Russia initiated a lawsuit in a Moscow arbitration court, seeking damages equivalent to the 185 billion euros ($217 billion) held by Euroclear, the largest securities depository in Europe, located in Belgium. A preliminary hearing for this case is set for January 16.
Following Belgium, France ranks as the next-largest holder of frozen Russian assets, amounting to about 18 billion euros, primarily held by commercial banks, according to the Financial Times. Thus far, Paris has resisted pressure from its EU counterparts to reveal which French banks possess these assets.
Overall, EU commercial banks are estimated to hold around 25 billion euros ($29 billion) in Russian state assets, according to the FT.
BNP Paribas, France’s largest bank, refuted claims that it may be holding a significant portion of these funds, asserting that it “does not possess any assets in France from Russian public entities, including the Central Bank of Russia.”
Among other EU nations, Germany has approximately 200 million euros ($234.7 million) in Russian sovereign assets, Cyprus holds less than 100 million euros ($117.3 million), while Sweden and Luxembourg each have about 10,000 euros ($11,700), as reported by the FT.
Belgian officials anticipate that Russia will first respond by seizing around 17 billion euros ($20 billion) worth of Euroclear client assets still located in Russia, according to the newspaper.
Meanwhile, several major European banks continue to maintain substantial exposure to the Russian market.
Italy’s UniCredit has roughly 3.5 billion euros ($4.1 billion) of capital tied up in Russia, while Austria’s Raiffeisen reported $2.9 billion in revenue generated there last year.
These banks are among more than 2,300 foreign companies that remain operational in Russia, even as nearly 1,900 others have withdrawn or reduced their presence since Moscow’s full-scale invasion of Ukraine.
“If Europe decides to seize Russia’s reserves, Russia could simply transfer funds from [frozen] type-C accounts into its budget,” explained Alexandra Prokopenko, an economics analyst and former Central Bank official.
“This provides them a source of direct revenue while they are experiencing a deficit and overspending on defense,” she informed the FT.
