(Bloomberg) -- The European Union will receive this month the first tranche of profits generated by sanctioned Russian Central Bank assets that are destined to boost Ukraine and its military.
Euroclear, the Belgium-based clearing house, said in a statement on Friday that it will make a first payment of €1.55 billion ($1.7 billion) following the EU’s implementation of legislation allowing the bloc to apply a windfall tax to the profits generated by the immobilized assets.
The EU has agreed to use the bulk of the funds to provide Ukraine with weapons and to support the country’s defense, with the first transfer of aid expected later this month.
Euroclear’s financial results for the first half of this year show that €173 billion worth of sanctioned assets are held through the clearing house as of June. The funds have so far earned about €3.4 billion since they were immobilized, although profits generated before Feb. 15 will be retained by the clearing house as a buffer to handle current and future risks, such as litigation.
The EU and the Group of Seven agreed last month to frontload the profits that will be made by the blocked funds over time with the aim of providing Ukraine with about $50 billion dollars in loans this year.
G-7 nations and the EU aim to give out loans to Ukraine that will be repaid using the profits generated by the roughly $280 billion of blocked funds, most of which are held in Europe. Allies are currently working through the mechanics of how each will implement the plan.
That arrangement, which would structure loans roughly based on the size of each participant’s economy, would replace the current EU scheme.
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