21 Jun 2023 13:21

Option of resolving problem of investors' frozen assets via redemption using funds from type 'C' accounts being worked on - Nabiullina

MOSCOW. June 21 (Interfax) - The Central Bank of Russia (CBR) is considering various options for exchange of assets frozen in Russia and the EU, including redemption using funds from type "C" accounts, CBR Governor Elvira Nabiullina said while speaking in the Federation Council.

"We are also considering options that may be associated with the exchange of frozen assets, although this is a complex issue. This includes the possibility of redeeming frozen assets using funds from type "C" accounts. This option is now being worked on," she said.

First Deputy Governor of the Central Bank Vladimir Chistyukhin said at a meeting of the Federation Council Committee on Budget and Financial Markets on Tuesday that the CBR is working on a scheme to sell frozen foreign securities of Russian investors to nonresidents at a premium. It is proposed that funds from type "C" accounts be used for settlements, he said. "At the same time, we believe that they should not be sold at a discount, but at a premium. Sell for what? For funds in type "C" accounts, which are held by foreign legal entities and individuals. Why at a premium? Because many foreign individuals have long ago provisioned the funds that ended up in type "C" accounts. That is, they are actually worth zero to them. In this sense, getting at least something - this is already a big plus," he said.

According to the CBR, as of the end of November 2022, assets of Russian investors worth about 5.7 trillion rubles were frozen in European depositories Euroclear and Clearstream.

The aggregate amount of funds on special type "C" ruble accounts, where, among other things, income on securities owned by "unfriendly" nonresidents is blocked, as of the beginning of November 2022 exceeded 280 billion rubles. The regulator has not disclosed new data since then. According to Interfax sources, at the end of 2022 this figure was close to 600 billion rubles.

Interaction between the European central securities depositories Euroclear and Clearstream and the Russian central securities depository NSD (National Settlement Depository, part of the Moscow Exchange Group) virtually ceased almost immediately after events in Ukraine began. At that time, Russian authorities imposed currency and capital restrictions in response to the harsh sanctions, while European settlement and clearing organizations closed ruble "bridges" and opportunities for settlements in rubles. In early March 2022, the NSD imposed restrictions on transactions in the accounts of Euroclear and Clearstream, as prescribed by the Central Bank of Russia. In turn, the European depositaries restricted operations on NSD accounts.

In early June 2022, the European Union put NSD on its sanctions list, which led to the blocking of its accounts in Euroclear and Clearstream. In early October, the European Commission published clarifications according to which the authorities of certain EU member states could authorize transactions necessary to close by January 7, 2023 contracts and agreements entered into before the June 3 sanctions were imposed on NSD. Russian market participants submitted requests for general licenses to finance ministries in Belgium and Luxembourg to unblock the assets of all non-sanctioned investors.

Nabiullina said at a press conference on April 28 that the Central Bank is aware of sporadic positive and negative responses to requests to unfreeze the assets of Russian investors in Euroclear and Clearstream, but there is no general trend towards unblocking.