Finance
Euroclear at risk of Fitch ratings cut over Russian frozen assets
Published by Global Banking and Finance Review
Posted on December 17, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 17, 2025
2 min readLast updated: January 20, 2026
Euroclear faces a potential Fitch rating cut due to EU plans to use frozen Russian assets for a Ukraine reparations loan, raising legal and liquidity concerns.
Dec 17 (Reuters) - Ratings agency Fitch placed Euroclear Bank on "rating watch negative" on Tuesday, citing the potential for increased legal and liquidity risks from the European Union's plans to use immobilised Russian assets for a reparations loan to Ukraine.
Belgium-based Euroclear said on Wednesday Fitch's decision signalled a need for greater clarity and detail on the proposed reparations loan for Ukraine and was preparing for a range of scenarios.
"With the right comprehensive safeguards, we are confident that material risks for Euroclear will be managed appropriately in both the short and long term," a Euroclear spokesperson said in an emailed statement.
The EU, searching for a way to finance Ukraine's defence and budget needs in 2026 and 2027, plans to use up to 165 billion euros ($193.84 billion) of Russian central bank assets frozen in Europe without confiscating them.
Euroclear, the Belgian Central Securities Depository, was holding bonds for the Russian central bank at the onset of Russia's invasion of Ukraine. The bonds have since matured, but the cash remains in Euroclear because of EU sanctions against the Kremlin.
This cash is now invested at the European Central Bank in overnight deposits.
The EU wants Euroclear to instead invest in zero-coupon bonds issued by the European Commission. The EU would then use the cash to issue a reparations loan to Ukraine. The loan would be repaid by Ukraine once it receives war reparations from Russia in a peace agreement.
Fitch warned that insufficient legal and liquidity protections for such a plan could create a maturity mismatch in Euroclear's balance sheet if Russian central bank liabilities become payable.
The agency said it will make a decision on Euroclear's rating once there is sufficient clarity on the policymaking process and implementation of the reparations loan, which could emerge at an EU summit on Thursday and Friday.
The move affects Euroclear Bank and Euroclear Holding's long-term issuer default ratings of "AA", short-term IDRs of "F1+", viability ratings of "aa" and debt ratings, Fitch said.
($1 = 0.8512 euros)
(Reporting by Rajveer Singh Pardesi in BengaluruEditing by Chris Reese, Jamie Freed and David Goodman)
Liquidity risk refers to the potential difficulty a company may face in meeting short-term financial obligations due to an inability to convert assets into cash quickly.
A central securities depository (CSD) is an organization that holds securities such as stocks and bonds in electronic form, facilitating their transfer and settlement.
Debt instruments are financial assets that represent a loan made by an investor to a borrower, typically including bonds, loans, and notes.
A rating watch is a status assigned by credit rating agencies indicating that a rating may be upgraded or downgraded in the near future.
Frozen assets are financial assets that cannot be accessed or used due to legal restrictions, often as a result of sanctions or legal disputes.
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