Euroclear faces potential Fitch downgrade over frozen Russian assets
Photo: Fitch may downgrade Euroclear's rating due to frozen Russian assets (wikimedia.org)
Fitch Ratings has placed Euroclear, a Belgian bank, on Rating Watch Negative.
The change in category is related to the EU's plans to use the Bank of Russia's assets frozen in Euroclear (approximately €210 billion) to finance Ukraine.
The long-term issuer default ratings of Euroclear Bank and Euroclear Holding (AA), the short-term rating (F1+), and the debt ratings have been placed under review.
The agency points to a growing, albeit still low, probability of solvency problems for Euroclear if it has to fulfill its obligations to Russia.
At the same time, Fitch's baseline scenario assumes that if the EU's plan is implemented, protective mechanisms will be put in place for Euroclear that would allow it to maintain its current high rating.
Russia's frozen assets
On Friday, December 12, EU member states agreed to freeze Russia's assets worth €210 billion for an indefinite period. Now this decision will not have to be renewed every six months.
In addition, for several months now, the European Union has been considering the possibility of granting a reparation loan secured by Russia's frozen assets.
However, Belgium, where most of Russia's assets are held, namely around €140 billion, is opposed to this decision.
Belgian Prime Minister Bart De Wever is demanding that the EU provide Euroclear with protection against risks. Among the conditions is the provision of necessary resources in case Russia imposes sanctions.
On Monday, December 15, EU High Representative for Foreign Affairs and Security Policy Kaja Kallas said that negotiations on a reparations loan for Ukraine from frozen Russian assets are becoming increasingly difficult.
