Several major international banks fear that if frozen Russian assets are confiscated, Moscow may retaliate against their Russian subsidiaries.
Source. Bloomberg writes about this with reference to people familiar with the situation.
According to the manager of one of these banks, both the financial institutions themselves and their local employees may be persecuted. The manager of another said that his bank denies in principle the confiscation of reserves by the EU, although he does not directly oppose such a step.
Austrian Raiffeisenbank and Italian UniCredit continue to operate in Russia, while American Citi has not been able to get rid of all its assets, although it intended to leave Russia before the war started.
Meanwhile, European lawyers have concluded that Russian reserves cannot be confiscated, and there are even risks if they are invested with the aim of transferring the income to Ukraine.
The members of the working group on the use of Russian reserves concluded that "there are no sufficient legal grounds to allow the confiscation of frozen or blocked assets only on the grounds that the use of these assets is restricted by the European Union," according to the report, which was seen by Bloomberg.
"I understand perfectly well why the discussion of this issue evokes such emotions," Austrian Foreign Minister Alexander Schallenberg told Bloomberg, "but we are a state governed by the rule of law. We define a rules-based international order. Therefore, everything we do in this case must be absolutely unambiguous. It can be challenged and probably will be challenged in European and American courts. If a judge overturns any of these measures, it will be a diplomatic and economic disaster."
In addition, the European Central Bank has warned that the use of investment income in favor of third parties could force other countries that have reserves in the EU to turn away from the euro.
Therefore, another option now seems to be the best – a tax on excess profits from the management of Russian assets. The companies that manage them and actually profit from them may be required to transfer a significant amount to the European Union.
More than 200 billion euros have been blocked in the EU. For example, the Euroclear settlement system, which holds a significant portion of these funds, received almost 750 million euros in revenue by the first quarter of this year.
Speaking at a conference on Ukraine's recovery in London on Wednesday, European Commission President Ursula von der Leyen promised to prepare proposals on this by mid-July.