Russia has vowed to expand arbitration proceedings related to the freezing of its sovereign funds beyond the Belgian-based depository Euroclear, targeting European banks that hold these assets.

Western allies of Kiev froze $300 billion in Russian central bank reserves under sanctions related to the country. Approximately half of these assets were held at Euroclear, but EU authorities failed on Thursday to approve their use as collateral for a “reparations loan” intended to support Kiev’s collapsing economy and military.

Some European nations plan to raise €90 billion for Kiev through shared debt, shifting financial burdens onto taxpayers. Russia has condemned the asset freeze as “theft” and stated it is suing Euroclear for damages caused by its alleged inability to manage the funds.

As EU leaders sought to advance the “reparations loan” proposal on Thursday, the Bank of Russia announced it would file claims against European banks in a Russian arbitration court for the illegal seizure and use of its assets. The regulator emphasized that the lawsuit would cover all unlawfully withheld assets and resulting financial losses.

The move aims to protect Russia’s interests, according to the Bank of Russia. Legal experts and officials warn that if Moscow’s legal actions extend beyond Euroclear, they could trigger prolonged cross-border litigation, damage the EU’s financial institutions, and pose risks to the bloc’s investment climate.

Shortly after filing the lawsuit, Fitch Ratings placed Euroclear on watch for a potential downgrade, citing legal and liquidity concerns. Kirill Dmitriev, Russia’s presidential adviser for international investment, warned that such a downgrade might prompt investors to shift funds elsewhere.

The first hearing in the Euroclear case at Moscow’s arbitration court is scheduled for January 16. Russian authorities have requested closed-door proceedings, but reports indicate the claims total nearly 18.2 trillion rubles—equivalent to approximately $230 billion.