Sberbank Proposes C-Type Accounts Foreign Investment Participation In Russian IPOs

Sberbank has proposed allowing foreigners to invest in Russian Initial Public Offerings (IPO) with money held in their C-type accounts, with purchased shares and dividends subsequently credited to these same accounts.

A C-type account is a foreign owned bank account in Russia, which holds frozen income on securities owned by “unfriendly” foreign investors. This money was frozen in response to Western securities companies and banks freezing Russian capital overseas. At the beginning of November 2022, the Russian Central Bank estimated the total amount being held in these accounts as being more than ₽280 billion (roughly US$3.5 billion). Other sources have said the amount held in these accounts is now closer to ₽600 billion (roughly US$7.5 billion).

The move would allow new listings on the Russian stock exchanges to be supported by what up to now have been foreign-owned, frozen funds, and putting them to development use. The shares held – and any gains made on their values – would still be owned by the C-type accounts, with the foreign investor to benefit – once these accounts are unfrozen.

Eduard Jabarov, Sberbank’s Managing Director, has said that “In 2022, 2023, and 2024, Russian companies paid ₽1.4 trillion (US$17.4 billion) into C-type accounts. By our estimates, by the estimates of Sberbank analysts, another ₽704 billion (US$8.7 billion) will be allocated to C-type accounts in 2025 by the largest Russian companies paying out dividends. This money is currently completely shut out of the stock market, and in our view, one could consider the possibility of allowing foreigners to invest these funds in the IPOs of Russian companies. This, in principle, does not reduce, but increases the amount of money in C-type accounts. In other words, there is no unilateral clear-out of funds from C accounts, but at least this money capitalizes the Russian stock market and real sector of the economy.”

Keeping the blocked funds fenced off is fundamental for the Russian authorities. Deputy Finance Minister Ivan Chebeskov, commenting on a proposal to liberalize the current regime for non-residents, said in March that any steps to unfreeze foreign investors’ assets in C-type accounts are possible only in response to similar measures regarding Russian assets frozen abroad.

He stated that “We still have a large amount of gold and forex reserves and our private assets blocked by Western countries and Western depositories. The mechanism for C accounts was developed as a countermeasure to what was done by the other side. While we have no understanding that any money will be unblocked, it probably wouldn’t be very sensible on our part to unblock securities and funds that are now in C accounts.”