El País: The EU Is Preparing A "Bad Bank" Approach For Russian Assets

This will make it possible to channel funds to Ukraine.

The European Commission is exploring the possibility of creating a special financial structure that would help mitigate hypothetical legal risks associated with Russian assets, according to El País reports, citing sources. According to a high-ranking official in Brussels, the mechanism is being called a “bad bank, but with a number of differences.”

The main goal of the new initiative is to redirect Russian assets to Ukraine, bypassing the legal and financial pitfalls that the Belgian depository Euroclear has fallen into—this is where the majority of Russia’s assets are held, the newspaper reports.

The proposed approach involves separating these assets and the associated risks from Euroclear. The creation of a special European entity will allow the problem to be “transferred” from Belgian jurisdiction to the EU-wide level. As a high-ranking official in Brussels explained, this would allow any potential legal claims from Moscow to be distributed among all EU member states.

“Once these funds are under the control of the new EU entity, they can be used to finance operations for Ukraine, and the risk of claims from Russia will be distributed among the member states,” said a high-ranking official in Brussels.

The total value of Russian sovereign assets managed by the Bank of Russia at the start of the military operation was approximately $300 billion (excluding assets held by private individuals); the exact amount remains unknown.

At the end of last year, the EU indefinitely froze €210 billion in Russian assets. Prior to that, the freeze had been extended every six months and required a unanimous decision by all member states.

A group of countries, including Spain, Sweden, the Netherlands, and Poland, has already sent a letter to EU leaders calling for an immediate resumption of discussions on “new options” for using Russian funds. The foreign ministers of these countries emphasized that the planned €90 billion loan will not be sufficient to assist Ukraine.

A “bad bank” is a financial institution—a kind of “quarantine zone”—created during a crisis to cleanse the balance sheets of ordinary commercial banks of troubled, non-performing, or “toxic” assets.

In this context, managers focus exclusively on recovering as much value as possible from the troubled assets over time.

You can support the website Charter97.org

MULTI-CURRENCY ACCOUNT FOR ASSISTANCE:

Bank's name: Bank Millennium S.A.
Address: ul. Stanislawa Zaryna, 2A, 02-593, Warszawa
IBAN: PL97116022020000000216711123
SWIFT: BIGBPLPW
Name of the account holder: Fundacja “KARTA ‘97”
Purpose/title of payment: Donation for statuary aims

You can contact us by the e-mail [email protected]