France supports the reparations loan to Kyiv at the expense of frozen assets of the Russian Central Bank, but opposes a scheme that involves using funds stored in French commercial banks.
Source. The Financial Times writes about this with reference to its sources.
In total, 18 billion euros of Russian state assets are stored in France – this is the maximum in Europe, except for Belgium (185 billion euros), where Russian money is placed in the Euroclear depository, the publication notes.
The French authorities do not say in which banks the Russian assets are located, which causes "irritation" in other European capitals, writes the FT. Three sources of the newspaper believe that most of them may be in the largest French bank BNP Paribas, which declined to comment. Credit Agricole and Société Générale also did not provide comments.
The newspaper's sources explain that the conditions for storing funds in commercial banks differ from those in a depository and have different contractual obligations.
In particular, this concerns the need for commercial banks to pay interest, the FT's interlocutors explain.
Euroclear, as a depository, operates with securities according to centralized procedures. Some of the securities have already been redeemed – and cash is actually "accumulating" in accounts. Therefore, there is a technical possibility to first use profits or income, and not to confiscate the main reserves.
This has already been done before – Euroclear has already transferred several billion as income.
The operation through a depository is formally different from the direct withdrawal of money from a bank, the European Council of Foreign Relations explained: it is about the distribution of income from securities and the disposal of operating rights in the settlement chain.
Withdrawing money from commercial banks is more difficult because there are different contracts and depository obligations. Commercial banks have contracts with account holders (including interest payment terms, guarantees, the client’s right to dispose of the cash). A forced withdrawal could violate these contracts and create grounds for mass lawsuits against French banks or the state that forced them, writes the Financial Times.
It also threatens banking stability and carries a risk for the banking system – not only in relation to Russian assets, since the withdrawal of a significant amount of funds could undermine the banks’ liquidity and create a macroeconomic risk that France seeks to avoid.
In addition, assets owned by state institutions (in particular, the Russian Central Bank) enjoy international immunity from judicial seizure; therefore, in commercial banks, this issue can be legally complex.
Background. As Mind previously reported, France has approved the idea of a reparations loan for Ukraine – at the same time, the country has opposed the participation of its commercial banks in the scheme.