Over $2 billion in assets of international depositories has been frozen by Moscow in response to Western sanctions
The Bank of Russia (CBR) is working on mechanisms that will unlock the accounts of depositories from ‘friendly’ states in order to allow foreign investors into the country’s financial market, business daily RBK reported on Thursday, citing its sources.
Persons familiar with the matter explained to the outlet that investors from ‘friendly’ states (those that abstained from sanctions) at present cannot work on the Russian market because foreign depositories are “locked” in so-called C-type accounts. A C-type account is kept in rubles and cannot be opened in foreign currency or in a foreign financial institution. Meanwhile, the CBR is faced with the task of attracting more foreign investors to the market, the sources confided.
“There is such a request from market participants, and the Central Bank is working with it,” one of the unnamed sources told RBK.
The report noted that despite the fact that foreign investors’ accounts were completely blocked after the start of the military operation in Ukraine and the introduction of Western sanctions, they still had access to the Russian market. Investors from ‘friendly’ states can reportedly operate on the futures market and the bond market, and may make transactions with Russian shares, with the exception of securities of strategic importance and some other enterprises. All of that, however, is possible only if a non-resident is a client of a local broker, management company, or a bank. At the same time, such investors have to undergo the process of identification before gaining admission to trading.
For the accounts of those non-residents who work via foreign depositories, the C-type-account mode applies, which means that crediting and debiting of securities is limited and it’s impossible to withdraw funds. An exception to this rule is valid only when working through a foreign depository registered in Belarus, according to the Central Bank.
Russia froze the assets of international depositories last year in response to the seizure of its state funds by Western financial institutions. Moscow blocked 229.1 billion rubles ($2.3 billion) in assets belonging to Belgium’s Euroclear and Luxembourg’s Clearstream clearing houses, according to financial reports from Euroclear and Deutsche Börse Group.
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