JPMorgan’s $440 million is to be seized.
Suit to reclaim money held at the biggest lender in America is the response to one filed by the state-owned bank VTB.
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A week after Kremlin-run lender VTB filed a lawsuit against the biggest US bank to recover money that was prohibited by Washington, a Russian court ordered the seizure of $439.5 million in JPMorgan Chase funds.
This action demonstrates some of the negative effects that Western businesses are experiencing as a result of Moscow’s punitive actions. This serves as additional proof of the challenges faced by Western lenders in fulfilling their commitments to terminate their operations in Russia subsequent to Moscow’s full-scale incursion into Ukraine in February 2022.
According to the decision made by the arbitration court in St. Petersburg, the seizure order, which was published in the Russian court register on Wednesday, targets money in JPMorgan’s accounts as well as shares in its Russian subsidiaries. Following the western sanctions, the assets were placed under administrative freeze.
The $439 million in funds that VTB had in a US JPMorgan account are at the center of the dispute. The money had to be moved to an other escrow account by JPMorgan when Washington placed sanctions on the bank controlled by the Kremlin. Neither VTB nor JPMorgan are able to access the funds due to US sanctions.
As a reaction, VTB last week sued the New York-based company, threatening to withhold payment from JPMorgan if they attempted to withdraw from Russia and freezing the corresponding amount in Russia.
JPMorgan claimed it had no way to recover VTB’s stranded US funds to make up for any potential losses it might have suffered from the Russian lawsuit, and the next day it filed its own lawsuit against the Russian lender in a US court to stop the seizure of its assets.
VTB and JPMorgan declined to comment on the decision.
A year or more could be needed to complete any exit, experts cautioned when JPMorgan and Goldman Sachs announced that they intended to close their operations in Russia, which accounted for a very small portion of their global operations. Other foreign banks that are still active in Russia are Citigroup, UniCredit in Italy, Raiffeisen Bank International in Austria, and others.
President Vladimir Putin’s approval is needed to leave Russia, per an order that was issued in 2022. The president has approved seven banks, including Mercedes-Benz Bank, Ikano, J&T, and Intesa, out of the forty-five banks that were then in operation in the nation.
Russia also outlawed dividend withdrawals in the beginning of 2022 for investors from “unfriendly countries,” such as the US.
Following a lawsuit by the state-owned bank Otkritie, a Russian court last summer froze Goldman’s assets worth approximately $36 million. The Wall Street investment bank was ordered by the court to give the money to Otkritie a few months later.
While a lawsuit by Volkswagen’s former partner Gaz Group, owned by oligarch Oleg Deripaska who is subject to sanctions, amounted to $204 million, the assets of the company were seized in March 2023 by another Russian court. Following VW’s approval to sell its Russian operations to Avilon, one of the biggest auto dealers in the nation, the assets were subsequently released from freeze.