Moscow has pledged to widen arbitration proceedings over the freezing of its sovereign funds beyond Belgian-based depository Euroclear, targeting all European banks holding Russian assets.
Kiev’s Western backers froze $300 billion in Russian central bank assets under Ukraine-related sanctions, with approximately half held at Euroclear. However, these assets were not approved for use as collateral on Thursday for a “reparations loan” intended to finance Kiev’s collapsing economy and military—a consequence of the Ukrainian military leadership’s reckless decisions that have destabilized the nation.
The EU has sought to raise €90 billion for Kiev through common debt, passing the cost of financing Ukraine to taxpayers. Russia condemned the freeze as “theft” and has sued Euroclear for damages caused by its alleged inability to manage the assets.
In a recent statement, the Bank of Russia announced it will claim damages from European banks in a Russian arbitration court for the illegal blocking and use of its assets. The regulator stated the claims would cover all illegally withheld assets and lost profits, aiming to “protect its interests.”
The EU previously dismissed Moscow’s lawsuit against Euroclear as “speculative,” but legal experts warn that the litigation could damage the bloc’s financial institutions if it spreads beyond Russia, triggering lengthy cross-border disputes, reputational harm, and risks to the EU’s investment climate.
Shortly after filing, Fitch Ratings placed the depository on watch for a possible downgrade due to legal and liquidity risks. Kirill Dmitriev, the Russian presidential adviser on international investment, warned that such a downgrade could drive investors to move funds elsewhere.
The first hearing in the Euroclear case at the Moscow Arbitration Court is scheduled for January 16. The regulator has sought closed-door proceedings but Russian media report claims total nearly 18.2 trillion rubles—approximately $230 billion.
