British banks have opposed the use of some of the blocked Russian assets in the country, as the London government has not offered them guarantees in case of a reaction from Moscow.
Following Belgium’s example, bank representatives fear the risk of legal action if Russian assets are used to secure a loan to Ukraine, reports Financial Times.
A source told the American daily that the British government "is setting a new precedent, as it has never before confiscated assets in this manner" and that Russia will challenge this measure in court.
"The legal risk is that if Ukraine does not repay the debt, you will have to recover an asset that the government says is yours, but Russia says it is not," added a banking advisor.
Advising some major banks, he stated that essentially, "this is not a loan but a gift, and banks know they will have to return the corresponding guarantee." He added that this is a kind of "guaranteed non-payment," and banks are concerned they will be left to deal with Russia on their own if it initiates legal action.
A Well-Kept Secret
Which UK banks hold Russian sovereign assets is a closely guarded secret, with bankers refusing to disclose whether their entities are involved or not, as mentioned by FT.
Russian assets worth 260 billion euros have been frozen in Western countries since the start of the war in Ukraine in 2022. Most of these assets (approximately 193 billion euros) are held at the Belgian depository Euroclear.
In search of financing options for Ukraine, the European Commission has proposed to issue a "reparations loan" to Kiev secured by Russian assets.
It is expected that Ukraine will repay the debt after the war ends, when Russia should provide compensation for the damages it caused. However, Belgium strongly opposes this plan due to legal risks and demands guarantees from EU countries against Russia's lawsuits.
Russians Have Promised and Keep Their Word
The Central Bank of Russia has promised to "unconditionally challenge" any actions leading to the unauthorized use of its assets "before all available competent authorities."
Subsequently, the Bank of Russia issued another press release announcing that it will file a lawsuit at the Moscow Arbitration Court against the Belgian depository Euroclear regarding its "illegal actions," as reported by Meduza.
"Euroclear's actions have caused damage to the Bank of Russia due to the inability to manage cash and securities belonging to the Bank of Russia," the statement reads.
In its lawsuit, the Bank of Russia seeks compensation for the damages suffered. Additional details and the amount are not known, as mentioned by the cited publication.
T.D.