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A Russian court has ordered the seizure of JPMorgan Chase funds totalling $439.5mn a week after state-owned lender VTB launched a legal action against the largest US bank to “recover losses”.
The move is further evidence of the difficulties western banks encounter when trying to follow through with their 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, but not securities nor the domain jpmorgan.ru, according to the ruling issued by the arbitration court in St Petersburg. The assets had been frozen by authorities in the wake of the war in Ukraine.
VTB filed a lawsuit against the New York bank on April 17. It warned that JPMorgan was seeking to leave Russia and would refuse to pay compensation for what the Russian bank alleges were losses incurred because of the US bank’s action in the wake of the Ukraine war.
The following day, JPMorgan filed a lawsuit against the Russian lender in a US court to prevent a seizure of its assets, saying it would be a violation of an agreement between the two banks to settle disputes in New York.
JPMorgan and VTB declined to comment on the ruling.
Last summer, a Russian court froze about $36mn worth of assets owned by Goldman Sachs following a lawsuit by state-owned bank Otkritie. The court a few months later ruled that the Wall Street investment bank must 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.
When JPMorgan and Goldman 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 the 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.
Additional reporting by Ortenca Aliaj in London
