NEW YORK/LONDON (Reuters) – Global investors and banks have been voicing confusion about their efforts to convert depositary receipts of Russian companies into ordinary shares in compliance with a new Russian law, according to advisors and client communications from the banks.

Some banks including Citigroup and BNY Mellon have had to temporarily halt these processes, after Moscow made a drive to ensure Russian firms axe their depositary receipt programs. The intent of the law was to reduce the influence of foreign banks on Russian companies after Moscow's invasion of Ukraine.

Many international investors who have tried to convert their Russian assets have been unable to do so, the advisors said.

"This is complete chaos now," said Grigory Marinichev, a partner at law firm Morgan Lewis, which is advising roughly 300 investors and brokerages. "Nobody understands what is happening and what will happen next."

JPMorgan & Chase, Citigroup, Deutsche Bank and BNY Mellon act as depositary banks for most Russian depositary receipt programs, according to Clearstream. Depositary receipts are certificates issued by a bank representing shares in a foreign company traded on a local stock exchange.

In statements to clients, some banks cited difficulties verifying there are enough shares to execute cancellations of depositary receipts.

For example, BNY Mellon cited such a difficulty with Global Depositary Receipts in Russian gas company Novatek.

"BNY Mellon has closed its books for cancellations with respect to the Novatek DR program until a complete reconciliation of its books," BNY told clients in a Sept. 2 statement. On Sept. 27, BNY started accepting cancellations again, but said it could close it again at any moment due to reconciliation issues. The bank declined further comment.

Citi, after closing books "to ensure a complete and accurate reconciliation", reopened them last week. But the bank said in a statement to clients dated Oct. 5 seen by Reuters it may face reconciliation issues due to cancellations taking place directly in Russia.

Some large international funds have spent months devising ways to maximize potential returns for clients with stranded exposures.

BlackRock has been working to convert its depositary receipts, parking the underlying securities in a structure with a view to returning sales proceeds or income when sanctions permit and when market conditions allow some recovery in their value, a source close to the matter told Reuters. Reuters has been unable to verify whether BlackRock encountered any reconciliation problems.

One of the biggest U.S. pension funds separately told Reuters it did not see a clear solution for the securities as different rules in the United States and in Russia bar a divestment. The fund declined to be named because its investment strategies are private.

LOOMING DEADLINE

Moscow has imposed a Nov. 10 deadline for so-called forced conversion of shares.

In April, Moscow originally demanded a raft of Russian firms axe their depositary receipts programs. Initially, some companies ordered global banks and brokerages to cancel the depositary receipts, but in July Russia allowed investors to convert depository receipts into common shares directly in a process known as "forced conversion" that bypassed global banks.

In practical terms, this means some investors may end up taking possession of the underlying shares without formally cancelling the depositary receipts linked to those shares. While depositary receipts are under custody of global banks, the shares they represent are parked in Russia.

This has created headaches for the banks who effectively acted as guardians of the programs. They were struggling to match or "reconcile" the depository receipts on their books with the underlying shares now in Russian banks.

To avoid such issues, global banks decided to stop accepting cancellation requests. For awhile, this left investors only with the option of cancelling the depositary receipts directly in Russia, advisors said.

"Banks may end up having more people requesting a redemption than shares they have to deliver. This would create a legal liability," said Marc Zboch, an investment professional who launched the website "Russia Deadline" to help investors convert their receipts for a fee.

Foreign investors who want to convert their depositary receipts into local shares using the forced conversion must also jump through some hoops, supplying documents supporting their ownership which must be translated into Russian and notarized. Investors must present these in person in Russia either themselves or using a legal representative, according to advisors.

Investors are meanwhile discussing ways online to meet the Russian requirements and how to pay fees to Russian banks. Some investors are active in online discussion groups like the RU GDR/ADR Community on the Discord platform as they try to navigate the situation. They also complain their global brokers have not cooperated processing their requests or providing the required documents.

"Investors are sandwiched between a rock and a hard place," said Marinichev.

BEIJING (Reuters) -New bank lending in China nearly doubled in September from the previous month and far exceeded expectations after the central bank acted to spur an economy weakened by a property crisis and a resurgence of COVID-19 cases.

Chinese banks extended 2.47 trillion yuan ($344.58 billion) in new yuan loans in September, jumping from 1.25 trillion yuan in August, data released by the People’s Bank of China showed on Tuesday.

Analysts polled by Reuters had predicted new yuan loans would rise to 1.80 trillion yuan in September. The new loans also exceeded 1.66 trillion yuan a year earlier.

Policymakers are gearing up to consolidate a recovery in the world’s second-largest economy, which narrowly escaped a contraction in the second quarter, as COVID flare-ups and a deepening property slump weigh on the outlook.

“Expanded credit for infrastructure, manufacturing, real estate and other sectors will give a strong support for growth of credit and total social financing in the fourth quarter, helping to keep the economic operation within a reasonable range,” said Wen Bin, chief economist at Minsheng Bank.

Household loans, including mortgages, rose to 650.3 billion yuan in September from 458 billion yuan in August, while corporate loans rocketed to 1.92 trillion yuan from 875 billion yuan, central bank data showed.

New yuan loans totalled 18.08 trillion yuan in the first nine months, rising 1.36 trillion yuan from a year earlier, central bank data showed.

The central bank said in late September that it would increase efforts to consolidate an economic recovery, citing risks to the global economy and pledging to implement prudent monetary policy and to keep liquidity ample.

In August, the central bank cut the one-year loan prime rate (LPR), its benchmark lending rate, by 5 basis points, and lowered the five-year LPR by a bigger margin.

The central bank in September also lowered the interest rate for housing provident fund loans by 15 basis points for first-time home buyers from Oct. 1, in a bid to prop up the embattled property market.

Broad M2 money supply in September grew 12.1% from a year earlier, central bank data showed, in line with analysts’ forecasts in a Reuters poll. It rose 12.2% in August.

Outstanding yuan loans grew 11.2% in September from a year earlier, compared with 10.9% growth in August, which was in line with expectations.

BROAD CREDIT GROWTH QUICKENS

The central bank faces limited space to ease policy further due to worries over capital flight, as the U.S. Federal Reserve and other major central banks aggressively raise interest rates in a bid to put a lid on soaring inflation.

Chinese authorities are doubling down on an infrastructure push, dusting off an old playbook by issuing debt to fund big public works projects to revive the economy.

Local governments issued a net 3.52 trillion yuan in special bonds in the first eight months, the finance ministry data have shown, as authorities accelerated special bond issuance for infrastructure.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 10.6% in September, up from 10.5% in August.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies, and bond sales.

In September, TSF rose to 3.53 trillion yuan from 2.43 trillion yuan in August. Analysts polled by Reuters had expected September TSF of 2.73 trillion yuan.

($1 = 7.1682 Chinese yuan renminbi)