Euroclear depository earned €1.74bn in interest income from frozen Russian assets in 1H23, more than double compared with the €821mn reported in 2022, RBC business portal reported citing the financial group’s report. 

As followed by bne IntelliNews, the efforts to estimate and locate the exact volume of sanctioned and frozen assets are being accompanied by ongoing discussions on mechanisms for forcing Russia to compensate for the damages to war-torn Ukraine. 

Previous reports already claimed that excess interest income on frozen Russian assets at Euroclear settlement depository could be channelled to Ukraine. About €197bn in Russian assets are frozen at the depository, according to the Belgian government, of which €180bn are Central Bank of Russia (CBR) assets.

In 1H23 Euroclear Bank's balance sheet, where payments (dividends, coupons, redemptions) on frozen securities of Russians are accounted for, increased by €47bn and reached €150bn, according to the group's report. According to Euroclear's strategy, this money is invested to generate additional income. 

Such a significant interest income on Russian assets of Russians in Euroclear is explained by two factors – rising interest rates and a significant increase in balances that are used for investment. "Future income will therefore depend on the changing interest rate environment and the size of cash balances as sanctions develop," the company said in its report as cited by RBC.

From 2H23 onwards, Euroclear expects interest income growth to slow "as blocked payments and redemptions accumulate more slowly and economists' consensus forecasts suggest more stable interest rates."

The Euroclear report mentioned an eventuality of the funds being used "to finance the reconstruction of Ukraine".

However, last month the Financial Times reported that the European Central Bank (ECB) officials privately told the European Commission that plans to divert payments on bonds owned by the CBR would send a bad signal to global markets.

The European Union has also reportedly concluded that there is no legal way to confiscate frozen Russian assets and instead is focusing on using those assets temporarily.