In a strong warning, the Kremlin expressed concerns over the potential "catastrophic consequences" if the European Union (EU) proceeds with its plans to confiscate Russian assets held in Western banks. This comes as some Western banks are reportedly lobbying against the EU's proposal to redistribute billions of euros in interest earned on frozen Russian assets, fearing costly litigation.

The EU leaders, on Thursday, agreed to move forward with a plan that would allocate up to 3 billion euros ($3.24 billion) annually to supply arms to Ukraine. The aim of this move is to support Kyiv in its fight against Russia, with the original frozen assets still belonging to Russia. EU leaders believe that the proceeds could be utilized within a few months.

Responding to a report by Reuters highlighting concerns from banks about potential liabilities, Kremlin spokesman Dmitry Peskov issued a veiled warning. He stated, "The legal department of any bank understands the catastrophic consequences of such actions to expropriate assets, both for the bank, for the country as a whole, and for the European economy." Peskov further emphasized that the assets belong to their respective holders and owners.

Elvira Nabiullina, the Central Bank Governor, also weighed in on the issue. After the bank kept interest rates at 16%, Nabiullina stated, "Regarding EU action on frozen assets, decisions will be made, and we will take corresponding measures to defend our interests."

The potential confiscation of Russian assets by the EU has raised concerns about the impact it could have on the banking sector and the broader European economy. The Kremlin's warning highlights the potential repercussions of such a move, not only for the banks but also for the countries involved.

As tensions continue to rise between Russia and the EU, it remains to be seen how this situation will unfold. The EU's commitment to supporting Ukraine through the redistribution of frozen Russian assets has drawn strong reactions from the Kremlin. The coming days will determine whether the EU proceeds with its plans and if Russia takes any measures to defend its interests.