Kazakhstan’s Central Securities Depository transfers Russian stocks to subsidiaries of Western banks in Russia

The Kazakhstan Central Securities Depository (KCSD) is going to get rid of Russian securities it holds as a nominee holder by transferring them to Russian jurisdiction. In order to execute this task the KCSD will set up accounts in subsidiaries of Western banks in Russia. The KCSD Board of Directors made this decision late June, according to FrankMedia, a Russian media outlet, citing the depository’s website.

Since 2022, Russian brokers and managing companies had been transferring Russian securities to the KSCD for nominee holding. Now, the KCSD wants these securities to be kept in Russia. According to some media reports, the KCSD already transferred $12.8 billion worth assets last year, although the KCSD itself confirmed only 1.4% of the aforementioned amount – $170.1 million.

KCSD sees three banks as potential partners: Reiffeisen Bank, UniCredit Bank, and CitiBank. These are subsidiaries of the eponymous Western groups from Austria, Italy, and the USA, respectively. Even though these businesses have announced their intention to leave the Russian market or drastically cut their presence there, they haven’t done so yet. Citibank dropped its retail services in Russia after Western countries had imposed sanctions against the country. This process started in 2021, though.

The KCSD notes that not every chosen bank may agree to start accounts for nominee, so they may be opened in one or two banks. In case of being rejected by all three banks, the plan is not clear. Moreover, the list of new potential depositories includes Russian Infinitum and Solid IFC.

The KCSD came up with the idea of transferring the Russian securities for a nominal holding after the National Settlement Depository and National Clearing Center of Russian were hit by U.S. sanctions along with the Moscow Exchange. Before that only the National Settlement Depository had been on the EU sanctions list.

After that, the KCSD requested the brokers and managing companies to withdraw Russian securities in its nominal holding by August 10.