Western banks fear risks related to confiscation of profits from Russian assets
Pravda Ukraine
Some Western banks have begun opposing an EU proposal to redistribute billions of euros in interest earned from frozen Russian assets, fearing that it could lead to costly litigation.
Source: Reuters, citing senior sources in the banking industry, as reported by European Pravda
Details: On Thursday, 21 March, EU leaders are discussing a plan to utilise up to €3 billion a year to provide Ukraine with weapons in an effort to support Kyiv’s fight against Russia. Russia will retain ownership of the frozen assets underlying the plan.
However, some banks fear that they may be held liable by Russia if they are involved in any transfer of funds to Ukraine, and that the EU plan could be extended to assets in accounts they hold for sanctioned individuals and entities.
The EU has not yet raised the issue of such an extension.
The sources are also concerned that these proposals will further erode confidence in the Western banking system.
Euroclear holds the equivalent of €190 billion worth of securities and cash belonging to Russia’s Central Bank. Western banks also hold billions of euros, pounds and dollars in assets belonging to sanctioned companies and individuals.
The EU’s plan involves channelling about 90% of the seized funds through the European Peace Facility to purchase weapons for Ukraine. The rest will be used for Ukraine’s recovery and reconstruction.
EU, English and US sanctions legislation generally provides for the freezing of assets belonging to designated persons, but not confiscation. Assets can be confiscated under English law, but only if they are found to be the proceeds of crime.
Background:
- Austrian Chancellor Karl Nehammer said Vienna is opposed to the idea of using the proceeds of frozen Russian assets to finance weapons for Ukraine.
- However, German Chancellor Olaf Scholz and Belgian Prime Minister Alexander De Croo support it.
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