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Fitch Puts Euroclear Under Negative Watch as EU Pushes Frozen Russian Asset Plan
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Fitch Ratings has placed Belgium-based financial services firm Euroclear on Rating Watch Negative, citing rising legal and liquidity risks linked to the European Union’s plans to use frozen Russian central bank assets to finance support for Ukraine in a statement released on December 16.
Fitch said the decision reflects concerns surrounding proposals to deploy roughly €210 billion in immobilized assets belonging to the Central Bank of Russia, most of which are held at Euroclear.
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The rating action applies to Euroclear Bank SA/NV and Euroclear Holding SA/NV, whose long-term issuer default ratings remain at “AA” but are now under negative observation. Fitch also placed the firms’ short-term ratings (F1+), viability ratings, and debt ratings on the same watch status.
According to Fitch, the move reflects a “potentially increased liquidity and legal risk” stemming from European Commission plans to channel proceeds from frozen Russian assets into a reparations loan for Ukraine, as well as the EU’s recent decision to invoke emergency powers under Article 122 of the Treaty on the Functioning of the European Union.
While Fitch stressed that the likelihood of financial distress remains low, it warned that risks could materialize if Euroclear were ultimately required to meet obligations toward Russia without sufficient safeguards in place. In such a scenario, the agency said, a mismatch could emerge between Euroclear’s assets and liabilities, potentially affecting its solvency profile.
At the same time, Fitch emphasized that its base-case scenario assumes EU authorities would introduce robust legal and liquidity protections should the plan move forward. Under those conditions, the agency said, Euroclear’s credit fundamentals would remain consistent with its current high-grade rating.
Fitch added that it intends to resolve the Rating Watch once greater clarity emerges on how—or whether—the reparations loan will be implemented. Even if EU leaders reach a political agreement, the agency noted, the plan would still require detailed legal execution at both the EU and national levels.
For now, the decision highlights how the unprecedented use of frozen Russian state assets—while central to Europe’s long-term strategy for supporting Ukraine—also introduces new financial and legal complexities for the institutions holding those funds.
Earlier, Germany warned that EU countries refusing to back a proposed “reparations loan” for Ukraine, financed through frozen Russian assets, could face higher borrowing costs and credit downgrades, as divisions deepen ahead of a key EU summit.
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