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UK drops Russia assets plan for Kyiv

Scheme to leverage £8bn of frozen funds fails after EU rejects own proposal

JIM PICKARD AND ORTENCA ALIAJ

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The British government has ruled out its own attempt to use about £8bn in frozen Russian assets held by UK banks to aid Ukraine after a similar EU proposal collapsed in the early hours yesterday.

Sir Keir Starmer, prime minister, has been a key proponent of using immobilised Russian assets to help fund Ukraine’s defence efforts. Kyiv has warned that it faces collapse in early 2026 without additional support.

But yesterday, EU leaders struck a deal to lend €90bn to Ukraine, borrowed against the bloc’s shared budget, after its proposal to use immobilised Russian sovereign assets collapsed.

British officials said yesterday that

London would not unilaterally deploy frozen Russian assets in the UK to help Kyiv, having only been planning to do so in lockstep with Australia, Canada and the EU.

“We won’t move without international partners,” a government spokesperson said, adding that the UK would “continue to work closely with the G7 and EU on Ukraine financing.”

Despite the decision to scrap the plan, chancellor Rachel Reeves said the UK would work “urgently” with partners to ensure Kyiv received necessary funding.

She added that the UK’s support for Ukraine remained “ironclad”.

UK officials said yesterday that the government would “reprofile” $2bn of guarantees for World Bank lending, bringing the existing commitment forward to 2026 for Ukraine’s “immediate financing needs”.

The UK also has a separate standing commitment to provide £3bn a year in military support. Ministers are meanwhile working on “plan B” alternative financing options for Ukraine.

In March, the UK pledged a £2.3bn loan to Ukraine backed by profits from sanctioned Russian sovereign assets.

The Financial Times reported earlier this month that UK banks had been concerned about a government proposal to use about £8bn in frozen Russian assets as collateral for zero-interest loans to Ukraine without an offer to indemnify them against retaliation by Moscow.

Some senior bankers questioned the legality of such a plan amid concerns that the government was setting a new precedent, which could expose them to significant legal risks if a peace deal were reached and Russia decided to sue.

Which banks in the UK hold sovereign Russian assets is unknown as they are reluctant to disclose any involvement.

Starmer’s reluctance for Britain to move unilaterally comes despite his issuing a licence to transfer £2.5bn of frozen assets from Roman Abramovich’s sale of Chelsea Football Club to Ukraine earlier this week.

The prime minister warned the club’s former owner that the UK government is prepared to take him to court if he fails to release the funds.

The UK government imposed sanctions on Abramovich owing to his close links to Russian President Vladimir Putin after his country’s full-scale invasion of Ukraine in 2022.

He was then granted permission to sell the club under the condition that neither he nor his connections benefited from the sale. Since Abramovich sold Chelsea and other investments in 2022 to a consortium led by US investors Todd Boehly and Clearlake Capital, the multibillion-pound proceeds have remained frozen in a UK bank account.

The EU plan to lend €90bn to Ukraine is a compromise after member states failed to reach agreement on using frozen Russian sovereign assets.

The financial agreement represents a critical lifeline for Ukraine, and comes as Europe seeks to assert its right to influence US-led peace talks to end Russia’s almost four-year war against Kyiv.

After more than 16 hours of talks between EU leaders, they agreed to raise a loan of €90bn on capital markets, secured against untapped spending in the bloc’s shared budget, to fund Ukraine for the next two years. Kyiv will only have to pay back the loan after Russia has paid reparations.

UK drops Rus­sia assets plan for Kyiv

Scheme to lever­age £8bn of frozen funds fails after EU rejects own pro­posal

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