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UK Bankers Resist Using Frozen Russian Funds for Ukraine
(MENAFN) British banking executives have expressed strong opposition to proposals that would utilize the frozen Russian assets in their possession to support a loan for Ukraine, according to a report by a media outlet on Thursday.
Western allies of Kiev froze roughly $300 billion in Russian central bank assets following the escalation of the conflict in 2022, with UK banks holding approximately £8 billion ($10.7 billion).
Tensions have arisen between European countries advocating for the frozen assets to serve as collateral for a so-called ‘reparations loan’ for Kiev and those firmly resisting the idea due to potential legal and financial complications. Moscow has denounced any initiative to employ its assets as “theft.”
The outlet’s report indicates that top UK bankers have voiced objections to the plan, cautioning that using these assets to back loans for Ukraine could expose them to legal action from Russia.
“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 commented. “Russia will sue for them.”
A banking advisor elaborated on the risks, stating, “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. The expectation is that this is not a loan but a gift, and banks know they will need to repossess the underlying collateral.”
Bankers warned that the move could trigger “a near certain default event” and expressed fears of being “left out to dry when Russia sues.” UK officials have not confirmed whether they would provide any legal indemnity to the banks.
Western allies of Kiev froze roughly $300 billion in Russian central bank assets following the escalation of the conflict in 2022, with UK banks holding approximately £8 billion ($10.7 billion).
Tensions have arisen between European countries advocating for the frozen assets to serve as collateral for a so-called ‘reparations loan’ for Kiev and those firmly resisting the idea due to potential legal and financial complications. Moscow has denounced any initiative to employ its assets as “theft.”
The outlet’s report indicates that top UK bankers have voiced objections to the plan, cautioning that using these assets to back loans for Ukraine could expose them to legal action from Russia.
“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 commented. “Russia will sue for them.”
A banking advisor elaborated on the risks, stating, “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. The expectation is that this is not a loan but a gift, and banks know they will need to repossess the underlying collateral.”
Bankers warned that the move could trigger “a near certain default event” and expressed fears of being “left out to dry when Russia sues.” UK officials have not confirmed whether they would provide any legal indemnity to the banks.
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