Investors will take theirs – Kommersant FM

Vladimir Putin allowed the exchange of blocked assets. But it is unclear when this mechanism will work. Presidential Decree appeared November 8. It allows you to return part of the money to Russian investors affected by blockages. True, so far only on paper. Exchanges with foreigners must take place in the format of bidding, the terms of which will be determined by a government commission. The composition of the participants will be chosen by the Central Bank, but it is not clear on what basis. For investors, the transaction will be free, but the volume of assets for such an exchange should not exceed 100 thousand rubles.

How will all this work? And will it happen at all? Partner at the Delcredere law office Andrey Ryabinin suggested what awaits bidders:

“As I see this mechanism now: foreigners have money in type “C” accounts, Russians have blocked securities, these assets will be the subject of exchange. To begin with, a pool of certain assets must be formed that, in principle, can take part in the exchange. Then there should be interest from foreigners who have funds blocked in their accounts. Only then, when supply and demand coincide, will the mechanism be launched, the details of which we expect from the commission.

In general, this whole blocking story is unprecedented, so we need to develop unique solutions. For the Central Bank, all retail investors with small portfolios are equal. There is a disproportion of demand from foreign counterparties and investors whose assets are blocked, so the goal can only be partially achieved.

No one had any illusions that all the elements of the puzzle would immediately fit together here. And, most likely, gradually, as interested foreigners appear, these transactions will be closed, and Russian investors will be partially satisfied.

There is some demand from foreigners, but everyone needs details, and no one wants to expose themselves to additional risks in the jurisdictions where they originate, so everyone will wait for documents from the Central Bank and the trade union commission.

Therefore, this is a trial step on the part of the Russian regulator: to assess demand, to help those small investors whose assets are blocked.”

In 2022, the problem of blocking was commented on by the specialized association of stock market participants. According to their estimates, $30 billion worth of Russian assets in Europe are frozen, and 10 times more foreign assets in Russia. Since then, the calculations have been revised several times. According to the latest estimate by the Minister of Finance, which Anton Siluanov announced in August, the assets of 3.5 million Russians remain blocked, totaling 1.5 trillion rubles.

According to the presidential decree, special transit accounts will be created for transactions. The blocked securities of Russian investors will first be credited there, and then they will somehow be transferred to foreign brokerage accounts of non-residents who agreed to the exchange. In this case, the consent of foreign regulators is necessary, recalls Nikita Ryabinin, head of the Luxembourg office of the consulting company KRK Group:

“At the moment, all this is outlined. At the same time, the Central Bank and its subordinate structures are preparing the legislative framework. Clients will be able to participate in the exchange through the brokers with whom they have worked to purchase and hold these securities.

But a big question arises: how will the foreign side react to this? Euroclear, international clearinghouses and Clearstream apply sanctions against NSD, which is the National Settlement Depository in Russia. How will the calculations take place? This issue has not yet been resolved.

But the Russian side is creating its own legislative framework for this. If foreign partners are ready for such transactions and do not use sanctions packages, the Russian Federation will be able to carry out these calculations.”

At the first stage, when the idea was just announced, Finance Minister Anton Siluanov was ready to unblock the assets of foreigners in the amount of about 100 billion rubles. The potential exchange, if it takes place, will be absolutely voluntary, promised the head of the Central Bank, Elvira Nabiullina. In her opinion, such a mechanism will primarily help protect the rights of retail investors. For wealthier clients, unblocking through the courts remains a priority, says Yaroslav Kabakov, director of strategy at Finam:

“This is an important step in unfreezing assets. According to Moscow Exchange statistics, the average brokerage account is around 200 thousand rubles. 100 thousand rubles. – this is a kind of median. Most investors will take the news quite positively. For large accounts, there are options related to courts in the eurozone.

In order to avoid obstacles to further proceedings, an auction is held, the total number of applications for the purchase of assets and exchange. On the other hand, there are those who want to get rid of their assets in foreign securities in Russia. If we are talking about really large volumes worth millions of dollars, this will still remain within the scope of legal proceedings.

If we are talking about, say, $10 thousand, and the investor understands that courts in Europe will cost him more, it will be easier to submit an application, receive 100 thousand and close this story.”

Until now, authorities have reported only isolated cases of unblocking through the courts or under European general licenses. The presidential decree does not oblige the Central Bank to launch the exchange mechanism as early as possible; the document does not include any deadlines at all. The Central Bank is authorized to provide any explanations, but they have not yet commented on the situation.

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Ivan Yakunin