Russian law firm seeks to unfreeze funds tied up with Euroclear

Russian law firm Rybalkin, Gortsunyan, Dyakin & Partners (RGD) plans to appeal to Euroclear clearing house to help unfreeze funds of investors in foreign securities that were tied up by Western sanctions against Russia, a RGD partner said.

Following Russia’s move to dispatch thousands of troops to Ukraine on Feb 24, the European Union barred Euroclear from serving Russian customers as the West severed ties with the country’s financial system.

In May, Russia restricted trading in foreign shares that have been blocked by Belgium-based Euroclear, citing the need to protect investors and effectively freezing a part of foreign securities held by investors in Russia.

Ilya Rybalkin, a founding partner of RGD, said the law firm developed an institutional solution for the return of funds and securities of foreign issuers blocked by Euroclear to Russian and other investors.

“We would like to see an agreement on the implementation of a common asset unlocking scheme this year,” Rybalkin said in an interview cleared for publication on Thursday.

RGD intends to apply to Euroclear and the relevant European authorities in September for a general licence that allows transactions in blocked securities, having collected clients’ claims for around $500 million, Rybalkin said.

“We want to create a universal platform, to find an institutional solution that is accessible to a wide range of investors ... After three months of intensive work, we believe that our position is now developed.”

Frozen funds’ assessments vary. Euroclear said last month its bank’s balance sheet increased by 72 billion euro ($74.2 billion) year-on-year in the first half of 2022 thanks to blocked coupon payments and redemptions accumulated because of sanctions.

RGD has a dozen major investors among its clients, including Russian business owners and top managers along with Western investment companies, Rybalkin said. The firm is constantly in talks on new clients, while also preparing presentations for leading Russian banks that service wealthy customers.