BETTER FINANCE expresses concern over Deutsche Bank's disclosure of missing Russian shares. The bank recently revealed a shortfall in the shares underlying depositary receipts (DRs), further increasing the challenges for European investors seeking to recover their investments in Russian listed companies, especially individual non-professional ones.
DRs are used in international stock trading as a means to purchase foreign shares that are not listed on domestic exchanges. However, Russia banned DR transactions involving Russian shares due to the Ukraine war, aiming to prevent foreign investors from gaining voting rights and dividends. EU investors were given the choice to sell their DRs or convert them into original shares, although the latter option was limited to those with Russian securities accounts, virtually unavailable for EU individual investors.
While institutional investors have already written off their Russian assets, individual investors are facing significant uncertainties regarding the future of their DRs. While the 11th sanctions package of the EU could have potentially brought clarity to the situation for individual investors by granting authorisation to competent authorities of Member States to approve the conversion of Depositary Receipts (DRs) into Russian shares held at the Russian national settlement agent, Deutsche Bank's recent announcement, unfortunately, confirms the ongoing lack of clarity.
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