UK banks do not support the plan to use about £8 billion in frozen Russian assets as collateral for a loan to Ukraine. They say the government has not offered guarantees to cover potential lawsuits from Russia. Financial Times reported this, citing sources in the financial sector.
What the UK Had Planned
Earlier, The Times reported that the UK government was ready to provide Ukraine with about £8 billion in Russian assets. This money could cover more than two-thirds of Ukraine’s financial needs over the next two years. It could be used both for defence and for reconstruction in case of peace.
The UK is also seeking to coordinate with the EU, Canada, and other countries on a wider £100 billion support package for Ukraine. London believes that using Russian state assets would increase pressure on Moscow. It could also influence the Kremlin’s position in future negotiations.
Banks Warn of Legal Risks
According to FT, senior bankers say they could face serious legal risks. They warn that Russia could file lawsuits if UK banks use the assets as collateral for loans to Ukraine.
One of the main concerns is that a future peace agreement between Ukraine and Russia may not include provisions on reparations, which could help repay the loans. Bankers are worried that Russia might go to court.
Which UK banks hold these Russian sovereign assets remains a state secret. Financial institutions also do not disclose whether their banks are involved.
Position of the UK Government
UK officials have not yet commented on whether the state would compensate banks for possible losses. Notably, the plan involves using Russian assets as collateral, not seizing them completely.
The Treasury said it continues consultations with G7 and EU partners to find a legally and economically sound mechanism. It emphasized that the discussion does not involve frozen assets of Russian individuals, which total over £28 billion in the UK.
Talks with the EU and International Partners
The issue is being discussed at the government level. Recently, UK Foreign Secretary Yvette Cooper met Belgian Foreign Minister Maxime Prévot in Brussels. Prime Minister Keir Starmer plans to meet Belgian Prime Minister Bart De Wever on Friday.
Previously, multilateral talks were held in London with Starmer, Volodymyr Zelenskyy, Emmanuel Macron, and Friedrich Merz. FT sources say the consultations are progressing and the atmosphere remains constructive.
Conclusion
The UK’s plans have met strong resistance from banks. Without clear guarantees against lawsuits, banks are unwilling to take risks. The government has not yet offered a compensation mechanism.
The future of the initiative will depend on talks between London, the banks, and partners in the G7 and EU. The process may take time. However, the issue of using frozen Russian assets remains key for financing Ukraine in the coming years.
