Russia’s Rise in Funds, JPMorgan, BlackRock Can’t Handle – Bloomberg

Billions of dollars belonging to foreigners are lodged in Moscow. The money keeps growing, but the owner can’t touch it.

Increasing the cash is dividends on stocks and interest payments on bonds that Western investors didn’t sell before Russia’s invasion of Ukraine began. These are all part of the money that has been locked up by sanctions.

The accounts of foreign investors are a remnant of Russia’s days when it was connected to the world of international finance, and are a reminder of Russia’s deepening isolation. As the invasion of Ukraine enters its second year, uncertainty remains as to what will happen to the funds hoarded in Moscow.

Legally, the money belongs to some of the world’s largest investment firms, including JP Morgan Asset Management and Schroeder. Privately, however, many admit there is no prospect of a recovery, at least not as long as Putin is in office.

Tim Love of GAM Investment Management, who held Russian stocks as part of an emerging market equity fund, is in a resignation mood. “There is still a market in Russia, but when it comes to remittance of dividends and access to the securities that generate them, everything is subject to sanctions,” he said.

Asset managers expressed frustration in conversations about the issue, but many said they were unwilling to publicly discuss holdings in Russia while the war continued. Unless you are prepared to test Western sanctions to the limit, nothing can be done about the money in Russia.

At a news conference earlier this month, Russia’s central bank governor Nabiullina declined to reveal the balance of a special bank account for non-residents called “Type C.” However, he said the balance continued to grow.