9 Jun 2023 18:42

Central Bank considers exchange of assets frozen in Russia and EU possible - Nabiullina

MOSCOW. June 9 (Interfax) - The Central Bank of Russia is considering various options for exchanging the assets of investors that are frozen in Russia and the EU and considers this possible, Central Bank Governor Elvira Nabiullina said.

"Generally, we believe there can be an exchange of frozen assets, but within the framework of a swap. This is because assets are still frozen on both sides, they have not been confiscated," Nabiullina said at a press conference on Friday.

Nabiullina said at conference organized by NAUFOR, the National Association of Securities Market Participant, in the middle of May that there was no prospect of an "all-out swap" of frozen assets with unfriendly countries in the near future, which is a political issue.

Russian investors had about 5.7 trillion rubles in assets blocked in European depositaries Euroclear and Clearstream as of the end of November, the CBR has estimated.

The total volume of funds in special Type C ruble accounts, which, among other things, freeze income from securities owned by "unfriendly" non-residents, exceeded 280 billion rubles as of the beginning of November 2022. The Central Bank has not disclosed this indicator since then. Sources told Interfax the figure approached 600 billion rubles at the end of 2022. Central Bank First Deputy Governor Vladimir Chistyukhin told Interfax in an interview in the middle of May that the volume of funds in these accounts continued to increase.

Relations between European central depositories Euroclear and Clearstream and Russia's National Settlement Depository (NSD) were essentially cut off almost immediately after the start of the military operation in Ukraine last year. At the time, Russia, responding to tough sanctions, imposed currency and capital restrictions, while the European settlement and clearing systems closed ruble "bridges" and the option of settlements in rubles. The NSD, a division of the Moscow Exchange Group, imposed restrictions on transactions on Euroclear and Clearstream accounts at the beginning of March 2022 on the recommendation of the Central Bank of Russia (CBR).

At the beginning of June 2022, the European Union imposed sanctions on the NSD, leading to its accounts being blocked at Euroclear and Clearstream. Russian investors had about 5.7 trillion rubles in assets blocked in foreign infrastructure as of the end of November, the CBR estimated.

The European Commission issued clarifications in early October under which the authorities of some EU members could allow transactions necessary to close contracts and agreements entered into prior to the imposition of sanctions against the NSD on June 3 until January 7, 2023. Russian market participants filed requests for general licenses from the finance ministries of Belgium and Luxembourg to unblock the assets of all investors not subject to sanctions, but there have still not been any reports about the approval of any major request.

Nabiullina said at a press conference on April 28 that the CBR is aware of isolated responses, both positive and negative, to applications to unfreeze Russian investors' assets in Euroclear and Clearstream, but that there was no common trend to the unfreezing of these assets.