The unexpected profit from sanctions will be managed prudently and not be distributed to shareholders "until the situation becomes clearer", Euroclear said. Euroclear is owned by shareholders such as JP Morgan, Societe Generale, HSBC, Morgan Stanley, Sumitomo, London Stock Exchange Group and Euronext, with the top 20 owning 80% of the company. Settlement refers to the final leg of a stock or bond trade, along with the safekeeping of customer assets, which totalled 35.6 trillion euros in 2022. Total operating income grew by 21% to 1.95 billion euros in 2022, when earnings per share rose 30% to 191.7 euros, with a proposed dividend of 115.5 euros per share, up 31%. Excluding the impact of the Russian sanctions, adjusted net profit rose by 32% to 603 million euros as the company diversifies through acquisitions into new areas like funds distribution. ($1 = 0.9308 euros) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Euroclear Graphic ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Huw Jones; Editing by Bernadette Baum)
Messaging: huw.jones.thomsonreuters.com@reuters.net)) By Huw Jones
LONDON, Feb 8 (Reuters) - Europe's unprecedented moves
to sever financial ties with Moscow following Russia's invasion
of Ukraine helped Euroclear post a record year on Wednesday, but
also left the securities settlement house facing lawsuits from
disgruntled clients.
The European Union ordered Belgium-based Euroclear, a core
part of the global financial system's critical plumbing, to cut
ties with Russian customers in February last year.
That led to a loss of income for Euroclear that was more
than offset by interest on Russian cash from blocked coupon
payments on bonds and redemptions, building up on its balance
sheet at a time of rising interest rates.
Due to Western sanctions, Euroclear's balance sheet rose by
99 billion euros ($106.37 billion) to 124 billion euros in 2022,
with interest on the Russian cash alone totalling 821 million
euros.
"Future earnings linked to the sanctions will continue to
depend on the prevailing interest rate environment and the
evolution of the sanctions," Euroclear said in a statement.
"The Board expects interest income to continue to grow as
blocked payments and redemptions continue to accumulate, albeit
at a slower pace during 2023."
It said various counterparties from Russia have turned to
the courts in Russia and the European Union to challenge
Euroclear in a bid to recover frozen payments.
In case these lawsuits have any material impact, the company
said it had decided to separate the sanction-related earnings
from the underlying financial results when assessing the
company’s performance and resources.
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