Euroclear warns EU: Use of Russian assets for Ukraine may raise the price of debt

Belgian securities depository Euroclear has warned that the EU's plan to back a €140 billion loan to Ukraine with frozen Russian assets could be seen as "confiscatory" and raise borrowing costs for member states, the Financial Times reported on Thursday.

Euroclear said in a letter seen by the media outlet that the proposal carried the risk of damaging the investment climate in Europe and raising interest rate premiums on sovereign bonds.

Euroclear has not yet responded to Reuters' request for comment.

The depository holds about 185 billion euros ($215 billion) of Russian assets that are blocked in Belgium, while an estimated additional 25 billion euros of Russian state assets are frozen in EU banks in various countries, notably France and Luxembourg.

European Commission President Ursula von der Leyen told parliament on Wednesday that the Commission was ready to present a legal text on a loan plan to support Ukraine.

Euroclear CEO Valérie Urbain said the plan could lead to retaliation and potential legal action and called for Euroclear to be protected from such moves, the FT report added.

Belgium has expressed similar concerns, saying it wants other EU countries to guarantee that it will not be left alone to cover the costs and financial implications that may arise from the scheme.

Although EU leaders did not agree on the loan at the October summit, officials close to the negotiations between the Commission and Belgium are confident that any concerns can be resolved.

Slovakia and Hungary have announced that they will never support the financing of Ukraine from frozen Russian assets because of, among other things, corruption scandals involving people in President Volodymyr Zelensky's entourage.

(reuters, est)