Russia’s Central Bank has announced plans to pursue damages from European banks following the immobilization of billions in Russian sovereign assets by EU authorities. This action comes as European leaders convene in Brussels to discuss a loan for Ukraine, financed through the exclusion of approximately 210 billion euros ($246.5 billion) of Russian assets frozen during ongoing sanctions.
In a statement, the Bank of Russia indicated its intention to recover damages through Russian arbitration courts, citing unlawful seizure and use of its assets held in EU financial institutions. The specific banks targeted for litigation were not disclosed. The damages sought will reflect the value of blocked assets and the resulting lost profits.
This escalation follows a recent lawsuit filed in a Moscow arbitration court, where the Central Bank seeks damages equivalent to 185 billion euros ($217 billion) held with Euroclear, Europe’s largest securities depository. A preliminary hearing for this case is set for January 16.
In addition to Belgium, France has emerged as a significant holder of frozen Russian assets, reportedly retaining about 18 billion euros predominantly within commercial banks. Despite pressure from EU partners, French officials have withheld details about which banks are involved. Estimates suggest EU commercial banks collectively possess around 25 billion euros ($29 billion) in Russian state assets.
France’s BNP Paribas has explicitly denied holding any assets belonging to Russian public entities, including the Central Bank. Meanwhile, other EU nations, such as Germany and Cyprus, possess considerably smaller amounts in frozen assets—about 200 million euros ($234.7 million) and less than 100 million euros ($117.3 million) respectively.
Amid these tensions, Belgian officials speculate that Russia may retaliate by seizing approximately 17 billion euros ($20 billion) worth of assets still held in the country by Euroclear clients. Major European banks are also grappling with their exposure to the Russian market, with Italy’s UniCredit reporting around 3.5 billion euros ($4.1 billion) in stranded capital and Austria’s Raiffeisen bank declaring $2.9 billion in revenues from operations in Russia last year.
As sanctions persist, the dynamics within the banking sector remain fraught. Analysts, including former Central Bank official Alexandra Prokopenko, suggest that should Europe continue to act against Russia’s reserves, Moscow has the option to channel funds from frozen accounts into its budget, thereby generating direct revenue amidst a deficit and escalating defense expenditures. This strategy could potentially alter the financial landscape for both Russia and its European counterparts moving forward.
