France supports reparations loan to Ukraine, but not from assets in French commercial banks

France supports a reparations loan to Ukraine, but not at the cost of €18 billion in Russian state assets frozen in French private banks.

The Financial Times writes about this.

Paris has not disclosed the exact location and names of the banks holding the frozen Russian assets. The €18 billion in France is the second largest amount of Russian assets after the international depository Euroclear (€185 billion), which is located in Belgium and was previously forced to disclose information about Russian assets at its disposal. In third place is €7 billion in private banks in Belgium.

French officials argue that commercial banks are subject to other obligations. Therefore, they support the allocation of reparations credit only from Euroclear.

It is unclear how many banks in France hold the assets, although three informed sources told the Financial Times that the bulk is held by the country’s largest bank, BNP Paribas. BNP declined to comment.

What is a "reparation loan"?

The possibility of providing Ukraine with a €140 billion loan using frozen Russian assets has been discussed since early October. At that time, EU leaders were unable to agree on the loan — Belgium opposed it, and France and Luxembourg were concerned about the legal consequences.

The European Commission officially presented the idea of a reparations loan on December 6, and its details were revealed by Politico. This loan is to consist of €165 billion: €25 billion of frozen Russian state assets held in private bank accounts across the European Union, and €140 billion held in the Belgian financial institution Euroclear. The money is planned to be distributed as follows:

• €115 billion will be allocated to finance Ukraineʼs defense industry;
• €50 billion will cover Ukraineʼs budget needs;
• €45 billion will be used to repay the loan that the G7 provided to Ukraine in 2024.

Belgium is opposed to the loan, worried that Russia would sue it if the plan goes ahead, as the frozen assets are held in Belgiumʼs Euroclear. Belgian Prime Minister Bart de Wever has asked the other 26 EU countries to guarantee coverage of the legal and financial risks.

Meanwhile, according to Bloomberg, Russia has prepared a response to the Westʼs possible "reparations loan" to Ukraine — it will nationalize foreign assets.

And on December 5, Bloomberg, citing sources among European diplomats, wrote that the United States had lobbied several EU countries not to use Russian assets for reparations loans for Ukraine. American officials convinced EU member states that these assets were needed to secure a peace agreement between Kyiv and Moscow, so they should not be used to continue the war.

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