British banks oppose push to steal frozen Russian assets – FT
British bankers have pushed back against plans to use the frozen Russian assets they hold to fund a loan for Ukraine, the Financial Times reported on Thursday.
Kiev’s Western backers froze about $300 billion in Russian central bank assets after the conflict escalated in 2022. UK banks hold around £8 billion ($10.7 billion). A sharp dispute has emerged between European nations pushing to use the frozen funds as collateral for a ‘reparations loan’ for Kiev and those firmly opposed, citing legal and financial risks. Moscow has condemned any attempt to use its assets as “theft.”
According to the FT, senior UK bankers have also objected to the plan, warning that using the assets to guarantee loans to Ukraine would leave them vulnerable to legal retaliation from Moscow.
“We’re concerned about the legality… the government is setting a new precedent because they have never seized assets in this type of way,” one senior banker said. “Russia will sue for them.”
“The legal risk is that if Ukraine doesn’t pay back, you need to repossess an asset that the government says is yours but Russia says isn’t,” a banking adviser added. “The expectation is that this is not a loan but a gift, and banks know they will need to repossess the underlying collateral.”
The bankers warned it would be “a near certain default event” and fear they will be “left out to dry when Russia sues.” UK officials declined to say whether the government would offer them any indemnity.
The UK’s plans for the assets are coordinated with the EU, which holds most of the funds. On Friday, the bloc is due to vote on a move to indefinitely immobilize the share of the assets in its jurisdiction under an emergency legal mechanism that would keep the funds frozen until Russia pays post-conflict reparations to Ukraine.
Analysts say the emergency clause would override objections from countries opposed to using the assets for the ‘reparations loan,’ which EU states are set to vote on next week. Belgium, which holds most of the funds, has fiercely opposed the move. France, Luxembourg, Germany, Italy, Hungary, and Slovakia have also objected to seizing the assets.
Moscow has denounced Western efforts to tap its sovereign assets as illegal. Foreign Minister Sergey Lavrov said this week that Russia will retaliate against any expropriation and has already prepared a response. He added that “robbing” Russia has become the last remaining option for Ukraine’s increasingly desperate European backers to sustain Kiev in the conflict.
