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A Russian court has ordered the seizure of JPMorgan Chase funds totalling $439.5mn a week after Kremlin-run lender VTB launched legal action against the largest US bank to recoup money stuck under Washington’s sanctions regime.
The move highlights some of the fallout western companies are feeling from the punitive measures against Moscow. It is also further evidence of the difficulties western lenders are encountering when trying to follow through with pledges to close their Russia operations since Moscow’s full-scale invasion of Ukraine in February 2022.
The seizure order, published in the Russian court register on Wednesday, targets funds in JPMorgan’s accounts and shares in its Russian subsidiaries, according to the ruling issued by the arbitration court in St Petersburg. The assets had been frozen by authorities in the wake of the western sanctions.
The dispute centres around $439mn in funds that VTB held in a JPMorgan account in the US. When Washington imposed sanctions on the Kremlin-run bank, JPMorgan had to move the funds to a separate escrow account. Under the US sanctions regime, neither VTB nor JPMorgan can access the funds.
In response, VTB last week filed a lawsuit against the New York-based group to get Russian authorities to freeze the equivalent amount in Russia, warning that JPMorgan was seeking to leave Russia and would refuse to pay any compensation.
The following day, JPMorgan filed its own lawsuit against the Russian lender in a US court to prevent a seizure of its assets, arguing that it had no way to reclaim VTB’s stranded US funds to compensate its own potential losses from the Russian lawsuit.
JPMorgan and VTB declined to comment on the ruling.
When JPMorgan and Goldman Sachs announced their intention to close their Russia businesses, which made up just a small part of their worldwide operations, experts warned that any exit could take more than a year to accomplish. Other western banks including Citigroup, Italy’s UniCredit and Austria’s Raiffeisen Bank International are still operating in Russia.
Since a decree issued in 2022, exiting Russia requires a greenlight from President Vladimir Putin himself. Seven banks — out of 45 then operating in the country — have been granted presidential approval, including Mercedes-Benz Bank, Ikano, J&T and Intesa.
In early 2022, Russia also banned shareholders from “unfriendly countries”, including the US, from withdrawing their dividends.
Last summer, a Russian court froze about $36mn worth of assets owned by Goldman following a lawsuit by state-owned bank Otkritie. A few months later the court ruled that the Wall Street investment bank had to pay the funds to Otkritie.
In March 2023, another Russian court seized $204mn worth of Volkswagen’s assets in Russia pending a lawsuit by its former partner Gaz Group, owned by sanctions-hit oligarch Oleg Deripaska. The assets were later unfrozen as VW received permission from the Russian authorities to sell its Russian business to Avilon, one of the country’s largest car dealers.
Additional reporting by Ortenca Aliaj in London
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