This April 14th story corrects the first dateline between Washington and London.

Sinead Cruise, Carolina Mandl

LONDON/NEW YORK – Russian Companies and Global Banks, BNY Mellon included (NYSE:). Deutsche Bank (ETR:), Citigroup JPMorgan (NYSE 🙂 and JPMorgan(NYSE 🙂 may make money if Moscow decides to remove Russian company depositary receipts foreign exchanges. Two people who are familiar with this matter say they could be able to profit.

Potential windfalls are due to fees bank issuers of depository receipts may contractually charge investors when they cancel a product.

The exact amount of money that banks and companies could earn is not known. Banks may also charge fees, which might anger investors.

According to Reuters calculations, however, fees can potentially amount to hundreds of millions of US dollars based upon fee data from the source.

Moscow, under pressure from Western sanctions is planning to remove Russian depositary receipts for foreign currency exchanges from Russia and to convert these into local Russian securities to try to lessen foreigners’ influence over the companies.

The bank will issue depositary receipts that are certificates to represent shares in foreign stocks. These receipts allow investors to trade in foreign stocks from their home country and in their preferred time zone.

More than 30 Russian depositary receipts have been issued to Russian companies, including Gazprom, Rosneft and Lukoil. They were issued among other institutions by BNY Mellon and Deutsche Bank.

Standard agreements allow for the cancellation of depositary receipts by either the investor or the issuer. Investors typically get cash from the sale or transfer of underlying shares. However, they retain the rights to custody.

Two sources stated that banks charge an administration fee of typically $0.05 per receipt. This may be split with companies.

The banks may have to cancel Russian depositary receipts if Moscow is removed from the Russian list. According to three sources, banks could charge fees even if they were forced to.

According to Reuters, an Rosneft shareholder could have to pay $7.5million in cancellation fees if he or she has 150,000,000 depositary receipts that are equivalent in number to the shares.

Banks may find it difficult to transfer cash to certain companies due to the strict Western sanctions.

However, there are some investors who believe that fees should not be charged. One global asset manager stated to Reuters that if Russia passed the de-listing legislation, there should not be fees. This would mean investors have no other choice. However, the other sources state that banks must still cover these costs.

BNY Mellon (Deutsche Bank), JPMorgan, Citigroup and JPMorgan declined to comment. Russian companies didn’t respond to Reuters email requests for comment.

MARKET FREEZE

Moscow closed its exchange and banned foreigners from exchanging shares in custody accounts. The Russian central bank also prohibited foreigners selling Russian shares.

Investors who wanted to reduce their Russia exposure were unable to get receipts cancelled by banks due to the restrictions.

BNY Mellon (Citi), JPMorgan and Citi have resumed cancelling cancellations after curbs on custodians were removed. However, foreign banks can still not sell shares so investors must instead take care of them. An account in Russia is required for investors to be able to make this happen.

Three people believe that investors may hold on to their receipts while they wait for the right time.

Investors are concerned about Russia’s de-listing plan.

Apart from potential cancellation fees investors worry about what might happen if they are unable to open a local custody.

JPMorgan advised clients that they may be eligible to open Russian accounts under certain circumstances, if the law changes.