ADR (“American Depository Receipts”) are certificates that replace shares in Russian companies such as Gazprom, Lukoil or Rosneft on Western stock exchanges. These certificates must now be converted into original Russian shares within a week, but this is only possible with a Russian depot, which hardly any investor has, as the IVA boss explained in the ORF “Mittagsjournal” on Saturday.
Smoke through the crisis not possible
Even the domestic custodian banks cannot help investors due to the sanctions against the Russian central securities depository NSD. If you don’t convert ADRs into shares, US banks will sell the original shares and credit investors with what is currently very little proceeds. “It will be impossible to get through the crisis,” says IVA board member Beckermann in a broadcast. “Unfortunately, the sanctions hit investors in the long term.” On the other hand, Russian investors or perhaps US banks would benefit.
“For more risk-averse investors, simply registering for conversion can be a sensible strategic intermediate step that harbors risks. It’s not a real solution either.”
ADRs are not only found in thousands of private portfolios, but are also an important part of various Eastern European funds. Since the Ukraine conflict, prices for many ADRs have fallen to pennies or are zero. According to the IVA, the first investment funds would have to close. European investor protection associations have therefore already asked for help from the EU institutions.
Source: Nachrichten
