The Russian finance ministry unveiled a plan to allow Russians with frozen foreign securities to sell them to foreigners with frozen assets in Russia starting from March 25.
Transactions Through Russian Broker:
Transactions will be facilitated through a Russian broker by President Vladimir Putin’s decree aimed at unblocking assets frozen by Western sanctions and Russian counter-measures since the start of the war in Ukraine.
The move is being criticized by investors and regulators, with Britain’s Foreign Office dismissing it as Putin’s desperate attempt to mitigate the impact of G7 sanctions. Some investors question the West’s willingness to make concessions to Russia amidst ongoing tensions.
Procedure and Timeline:
Selling applications must be submitted to the Russian broker by May 8, and settlement is expected by September 1, 2024. Russians can apply to sell securities valued up to 100,000 roubles, and the auction process will occur between June 3 and July 5.
Although the scheme is designed to bring Russian capital back into the country, it faces controversy for potentially violating the purpose of sanctions. Concerns persist over the feasibility and practicality of the proposal amidst escalating tensions.
Asset Freeze Impact:
More than 3.5 million Russians have frozen assets abroad, amounting to around 1.5 trillion roubles. The new mechanism aims to enable citizens of “unfriendly” countries to buy these assets using funds from special accounts in Russia.
Russian-owned foreign securities will be pooled into lots for foreign buyers to bid on, with the eventual sale price required to meet or exceed an initial auction price set by the broker. Under the scheme, Russians are limited to selling securities worth up to 100,000 roubles.