Euroclear

2024

The court recovered 1.8 billion rubles from Euroclear in favor of Transcapitalbank

On June 10, 2024, the Moscow Arbitration Court partially satisfied the claim of Transcapitalbank (TKB) against Euroclear Bank, deciding to pay more than 1.8 billion rubles (about $20.3 million) and 9.572 million rubles (about €99 thousand) in losses. According to RIA Novosti, this decision was an important step in a long-term dispute related to the blocked assets of Russian clients in European depositories.

According to the newspaper, TKB, one of the largest Russian banks, owns securities placed in the accounts of the National Settlement Depository (NSD) in Euroclear Bank. In June 2022, the European Union imposed restrictions against NSD as part of the sixth package of sanctions, which led to the blocking of funds and securities of Russian clients in Euroclear and Clearstream.

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Freepik

According to representatives of the TKB, since March 2022, the bank has not received payments on its securities due to sanctions, which was the reason for filing a lawsuit in December 2022. Euroclear Bank, in turn, did not recognize the claim and tried to terminate the proceedings, arguing that the Russian court does not have the competence to consider it. However, the court denied this request and continued the case.

As noted by a financial market analyst, the court's decision in favor of TKB may become a precedent for other Russian companies and banks affected by asset blocking. To date, the total amount of claims in the Russian arbitration against Euroclear and Clearstream exceeds 700 billion rubles. In August 2023, this figure was more than 200 billion rubles.

Earlier, St. Petersburg Bank also won the case against Euroclear, having received a decision to pay $107.1 million and €489 thousand. This case was the first successful lawsuit of Russian companies against European depositories.^[1]

Euroclear earned more than 5 billion euros on blocked Russian assets in two years

From the 2 quarter of 2022 to the first quarter 2024 Euroclear earned more than 5 billion euros on blocked Russian assets

Income from frozen Russian assets in the Euroclear depository since the beginning of 2024 amounted to €1.6 billion, Echo said in early May 2024.

The IMF warns against violations in connection with the possible use of Russian assets to help Ukraine. First Deputy Managing Director of the IMF Gita Gopinat, speaking about the West's desire to use the assets of the Russian Federation in Ukraine, reminded states of the need to follow legal norms and guarantee sufficient legal justification for any of their actions.

2023

Euroclear earned €4.4 billion in 2023 on frozen Russian assets

The Euroclear financial group earned €4.4 billion in 2023 from Russian assets that were frozen in the central depository due to EU sanctions . This is about 80% of all interest income of the financial group for the entire year.

The net interest income of the financial group in 2023 increased by 70% - to €5.5 billion in 2023 compared to €1.17 billion in 2022.

Euroclear continues to separate revenues related to sanctions against Russia from underlying financial results and hold those revenues until further guidance on the distribution or management of those revenues is provided.

Blocking assets in Russia for 217.4 billion rubles

The volume of assets of European depositories Euroclear and Clearstream blocked in Russia amounted to 229.1 billion rubles, follows from the reports of Euroclear and Deutsche Borse Group (which includes the Clearstream depository) for 2022. The documents were released in June 2023.

The volume of blocked assets of Euroclear and Clearstream amounted to 229.1 billion rubles

As Vedomosti writes with reference to the materials of the Belgian Euroclear, by the end of 2022, 188.5 billion and 28.9 billion rubles were blocked in rubles on accounts of type "C" and "I," respectively. Accounts "C" are intended for transactions for the purchase and sale of foreign currency by non-residents, transactions with securities and investments in the Russian economy. And accounts are used to credit money intended for payments to holders of Russian Eurobonds, the rights to which are accounted for in foreign infrastructure. The money coming into these accounts is blocked. In the report, Clearstream named the total amount of funds blocked in Russia - €134.1 million (about 11.7 billion rubles).

Euroclear and Clearstream froze Russian assets due to sanctions in 2022.

In December 2022, the National Settlement Depository received permission to unblock foreign assets from the Ministry of Finance Luxembourg and the Treasury. At Belgium CENTRAL BANK that time, they said that the permission of the European authorities to unblock assets did not guarantee their return to investors. In May, the head of the Central Bank of Russia Elvira Nabiullina stated that investors returned assets from abroad by about 3 trillion rubles.

In June 2023, it was reported that Russians were preparing a class action lawsuit against European depositories Euroclear and Clearstream to unblock assets abroad. Russian investors expect to get their funds back by collecting the assets of foreigners who invested in the country's securities. This money was mirror blocked in the national settlement depository (NSD) in response to Western sanctions.^[2]

Closing the ruble account in Moscow and the first ever forced conversion of ruble balances of customers

In February 2023, it was announced that Euroclear would forcibly convert the ruble balances of customers. This is the first case of forced conversion by European depositories. Euroclear stopped accepting the ruble as a settlement currency and closed its correspondent account in Moscow (at ING Bank).

2022

Interest income from frozen assets of Russians amounted to 821 million euros

Interest income from investment of Russian assets blocked in Euroclear in 2022 amounted to 821 million euros. According to the results of the first half of the year, this figure was 110 million euros.

Interest income is expected to continue to rise in 2023 as blocked payments and repayments continue to accumulate, albeit at a slower pace.

Frozen assets of Russians brought the company a third of the profit for 9 months

Revenues from frozen assets of Russians provided a third of Euroclear's profits, frozen assets of Russian investors had an "unprecedented" impact on financial results, Euroclear noted.

For 9 months of 2022, the holding earned €340 million from them, and in the future this amount will continue to grow, the company believes, "since blocked payments and repayments continue to accumulate amid rising interest rates."

Euroclear keeps records of securities of Russians, it also receives income paid on these securities (coupons, dividends, repayments). Due to EU sanctions on NSD, which is part of the payment transfer chain, these revenues cannot be transferred to Russian investors, so they are stored in the accounts of Euroclear, which, according to its business strategy, continues to invest them.

Excess profits from storing more than 70 billion euros of payments on frozen due to the rupture of the depository bridge with Russia assets

European depository Euroclear received 110 million euros of income from storing more than 70 billion euros of payments on frozen assets due to the rupture of the depository bridge with Russia. Euroclear's balance sheet has grown more than 3.5 times in six months.

Sanctions blocked 23 billion euros of dividends of Russian investors

In Euroclear, due to EU sanctions, against the background of Russia's special operation in Ukraine, 23 billion euros of coupons and dividends of Russian investors have accumulated. Euroclear's balance sheet for the first quarter of 2022 grew by 23.4 billion euros on an annualized basis, or 80%. Due to the fact that the depository bridge between Euroclear and other Russian depositories, in particular with the National Settlement Depository (NSD), has been destroyed due to sanctions, coupons and dividends intended for Russian investors and vice versa have been accumulated on Euroclear's balance sheet since February 28.

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