Russia prepares decree to unfreeze and swap assets with foreign investors

By Alexander Marrow

(Reuters) – Russian authorities are working on a draft presidential decree to give the country’s retail investors a way to unblock their frozen assets held in overseas accounts and sell them to foreign parties, the central bank said on Wednesday.

International sanctions against Moscow over its invasion of Ukraine have blocked many Russian investors’ access to securities held in jurisdictions outside the country, while Russian countermeasures have frozen Western funds within.

The central bank said the volume of assets “unblocked” would initially be limited and primarily aimed at retail investors, the bulk of whose investments in securities are held with Russian brokers at foreign accounting institutions.

It was not yet clear whether European clearing houses Euroclear and Clearstream, or financial regulators in Europe, would reciprocate. Euroclear and Clearstream did not respond to requests for comment.

“Interested foreign investors would be given the opportunity to buy ‘blocked’ foreign securities from Russian investors in exchange for funds held in type-C accounts,” the central bank said.

“The participation of investors (both Russian and foreign) in this process will be voluntary.”

Finance Minister Anton Siluanov on Tuesday asked President Vladimir Putin to support the plans, starting with the unblocking of about 100 billion roubles ($1.06 billion) in frozen funds belonging to retail investors.

He said more than 3.5 million Russian citizens currently owned blocked assets amounting to 1.5 trillion roubles ($15.96 billion).

“All these considerations will only make sense if foreign investors (in sufficient numbers) agree to the Russian authorities’ conditions and Western politicians/regulators do not obstruct it,” said Dmitry Polevoy, head of investment at Locko-Invest.

“From an economic point of view, such a proposal makes sense as many Western investors/funds have completely written off their holdings in Russian assets, and the return of some part of them makes sense.”

($1 = 93.9925 roubles)