Euroclear: EU's new Russia asset scheme equals expropriation

The European Union’s plans to boost revenue from frozen Russian assets by investing them in riskier instruments would be tantamount to expropriation, Euroclear has warned. In an interview with the Financial Times on Tuesday, Valerie Urbain, chief executive of the Brussels-based securities depository, said such actions could trigger an aggressive response from Moscow and compromise Euroclear’s legal standing.

"If you increase the revenues, you increase the risks. And so who is bearing that risk?" said Urben.

Roughly €191 billion in Russian state assets have been frozen in Euroclear accounts since sanctions were imposed on Moscow. The income generated from these assets has been reinvested primarily through low-risk instruments, mainly central banks. G7 countries are now using the proceeds to back a $50 billion loan package for Ukraine.

However, as interest rates set by the European Central Bank have begun to decline, returns from these assets are also shrinking. In response, the European Commission is reportedly considering the creation of a special-purpose vehicle (SPV) to transfer Russian assets into higher-yield—but riskier—investments.

Urbain cautioned that such a scheme could pose significant legal and financial risks to Euroclear:

"Legally speaking, the creation of an SPV would mean an expropriation of the cash from Euroclear," she said.

Urben believes that the scheme can only be viable if "in case of any call for restitution from the central bank of Russia, the assets are gone, somebody is covering for the amount"

Euroclear has already received over 100 legal claims related to frozen Russian assets, including from oligarchs and other sanctioned individuals.

According to FT sources familiar with the matter, Russia has retaliated by confiscating €33 billion in assets belonging to Euroclear clients.

• In June 2024, G7 leaders — the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada — agreed to provide Ukraine with $50 billion, secured by future income from frozen Russian sovereign assets.
• The EU pledged €18.1 billion, the US committed $20 billion, Canada promised 5 billion Canadian dollars ($3.6 billion), the UK pledged £2.26 billion ($3 billion), and Japan committed ¥471.9 billion ($3 billion).