SPB Bank preparing collective petition to OFAC to unfreeze client assets - SPB Exchange CEO

MOSCOW. May 14 (Interfax) - SPB Bank, the settlement depository of the SPB Exchange plans to send a collective petition to the U.S. Office of Foreign Assets Control (OFAC) in the coming weeks to unfreeze clients' assets, the exchange's CEO, Yevgeny Serdyukov said in an interview with RBC.

"The process of investors' independent appeals to OFAC will take place concurrently with the submission of a collective petition that SPB Bank is preparing. After preparing a substantial set of documents, SPB Bank's lawyers will send the appeal to unblock assets to OFAC. The process is long, with a huge legal component, since only part of the process is formalized. The collection of documents is being concluded, the petition will be sent in the coming weeks," Serdyukov said.

He said that after the imposition of sanctions against SPB Bank in February 2024, the exchange had to abandon the key avenue of its strategy to unblock assets, divesting the bank from the SPB Exchange Group.

Now the most likely scenario for unblocking assets could be requests for individual licenses, he said. "Therefore, to help investors our lawyers have worked out templates for independent requests to the U.S. Office of Foreign Assets Control," Serdyukov said.

The exchange plans to publish the application template, instructions and list of necessary documents on the website assetunlocking.rf before the end of May.

The process of unblocking Hong Kong issuers' shares held through "friendly" depositories is separate and "not related to requests for individual licenses," he said. "Despite the fact that this is a friendly jurisdiction, compliance there is fairly complex and protracted, but the process is underway. We're doing everything in our power, including promptly fulfilling the compliance requests of our counterparties," Serdyukov said.

He said blocked Hong Kong assets total just under $200 million. "Our international lawyers believe that an OFAC license will not be needed to unblock the Hong Kong assets," Serdyukov said.

OFAC put the SPB Exchange and SPB Bank on its sanctions list on November 2, 2023 and February 23, 2024, respectively.

After the sanctions were imposed, the exchange suspended trading of foreign securities and investors' assets were blocked. The exchange said foreign counterparties, including from friendly jurisdictions, stopped working with it due to fears of violating U.S. sanctions and being hit by secondary sanctions.

At the beginning of January, SPB Bank, which keeps the record of the foreign securities and foreign currency cash of trading participants and their clients, sent OFAC a strategy to unblock assets that included the SPB Exchange Group ceding control of the bank by reducing its stake and the issue of a license that would make it possible to unblock client assets.

After the U.S. imposed sanctions against the exchange, about $3 billion in securities belonging to investors were blocked.