Finance
JPMorgan in US-Russia battle sanctions war after foreign court orders $440 million seized from bank
Jamie Dimon, CEO and chairman of JPMorgan Chase, gestures as he speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee’s oversight hearing on Wall Street firms, on Capitol Hill in Washington, DC, on December 6, 2023.
Evelyn Hockstein | Reuters
A Russian court sided with state lender VTB Bank in its efforts to recover $439.5 million from JPMorgan Chase that the American lender froze American accounts after the invasion of Ukraine.
The court ordered the seizure of funds in JPMorgan’s Russian accounts and “movable and immovable property,” including the bank’s stake in a Russian subsidiary, according to a court order published Wednesday.
The order came after VTB filed a lawsuit last week in a St. Petersburg arbitration court seeking an acquittal for the funds frozen in the U.S. and asking for relief because JPMorgan has said it plans to leave Russia.
The next hearing in the Russian case is on July 17.
JPMorgan declined to comment. VTB did not immediately respond to CNBC’s request for comment.
The order was the latest example of how U.S. banks have become caught between the demands of Western sanctions regimes and foreign interests. JPMorgan is the largest U.S. bank by assets and is led by veteran CEO Jamie Dimon. a
Two years after Russia invaded Ukraine, the Biden administration has introduced an unprecedented series of sanctions, oil price ceilings and trade restrictions to weaken Moscow’s military machine.
On Wednesday, President Joe Biden signed a sweeping foreign aid bill that gives US officials new powers to locate and seize Russian assets in the US. It also fueled an ongoing U.S. effort to convince European allies to release Russian state resources to help Ukraine.
In its own lawsuit against VTB last week in the Southern District of New York, JPMorgan sought to block VTB’s efforts. noticing that US law prohibits the bank from releasing VTB’s $439.5 million.
This leaves JPMorgan exposed to a loss of almost half a billion dollars due to compliance with US sanctions.
The U.S. bank, which sought to block VTB’s efforts, said the Russian company had broken its contractual promise to seek relief in U.S. courts and instead sought friendlier refuge in Russia.
JPMorgan said Russian courts have enabled similar efforts by Russian lenders against U.S. or European banks at least half a dozen other times.
JPMorgan said it suffered “certain and irreparable harm” from VTB’s efforts.
