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bne August 2023 Companies & Markets I 17
Euroclear doubles interest on Russian assets
to €1.74bn in 1H23
bne IntelliNews
Euroclear depository earned €1.74bn in interest income from frozen Russian assets in 1H23, more than double compared with the €821mn reported in 2022, RBC business portal reported citing the financial group’s report.
As followed by bne IntelliNews, the efforts to estimate and locate the exact volume of sanctioned and frozen assets are being accompanied by ongoing discussions on mechanisms for forcing Russia to compensate for the damages to war-torn Ukraine.
Previous reports already claimed that excess interest income on frozen Russian assets at Euroclear settlement depository could be channelled to Ukraine. About €197bn in Russian assets are frozen at the depository, according to the Belgian government, of which €180bn are Central Bank of Russia (CBR) assets.
In 1H23 Euroclear Bank's balance sheet, where payments (dividends, coupons, redemptions) on frozen securities
of Russians are accounted for, increased by €47bn and reached €150bn, according to the group's report. According
to Euroclear's strategy, this money is invested to generate additional income.
Such a significant interest income on Russian assets of Russians in Euroclear is explained by two factors – rising interest rates and a significant increase in balances that are used for investment. "Future income will therefore depend on the changing interest rate environment and the size of cash balances as sanctions develop," the company said in its report as cited by RBC.
From 2H23 onwards, Euroclear expects interest income growth to slow "as blocked payments and redemptions accumulate more slowly and economists' consensus forecasts suggest more stable interest rates."
The Euroclear says the funds could be used to rebuild Ukraine, but the Financial Times reports that the European Central Bank (ECB) that plans to divert payments on bonds owned by the CBR would send a “bad signal” to global markets. The EU has already said there is no legal way to confiscate Russia’s money.
Five eastern EU states want extension
of Ukrainian grain ban
Wojciech Kosc in Warsaw
Five eastern members of the EU – Poland, Slovakia, Hungary, Romania, and Bulgaria – want the bloc-wide ban on imports of Ukrainian grain extended beyond the September 15 deadline that is in force now, agriculture ministers of the five countries said on July 19.
The ban currently in place covers imports of wheat, maize, rapeseed, and sunflower seeds. The five countries say the ban is necessary to protect home markets from the influx of cheaper Ukrainian produce that would depress prices.
What to do with the ban could become a flashpoint between the five countries and the European Commission again if the ban is not extended and the countries take unilateral action – which is what some of them said they will do.
Poland’s Prime Minister Mateusz Morawiecki pledged that Poland will maintain the restrictions regardless of the Commission’s decision.
"After September 15, either regulations will be worked out, or the government will implement them unilaterally," Morawiecki said in Warsaw, where the agriculture ministers met.
Hungary also said it would impose its own ban if there is no agreement on the EU level.
The current ban is the result of talks between the five “frontline” countries and the Commission after they had implemented national bans on Ukrainian grain imports, which went against the EU trade rules.
Following the agreement reached in May, the curbs became EU policy.
The five countries will present their position during the EU’s agriculture and fisheries summit on July 25.
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