JPMorgan Chase CEO and Chairman Jamie Dimon gestures as he speaks during an oversight hearing of the U.S. Senate Banking, Housing and Urban Affairs Committee on Wall Street firms on Capitol Hill in Washington, DC, December 6, 2023.
Evelyn Hockstein | Reuters
A Russian court sided with state lender VTB Bank in its attempts to recover $439.5 million. JP Morgan Chase that an American lender froze US 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 released Wednesday.
The order came after VTB filed a lawsuit last week in a St. Petersburg arbitration court seeking repayment of funds frozen in the United States and seeking relief as JPMorgan said it plans to pull out of Russia.
The next hearing on the Russian case will take place 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 U.S. banks 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.
Two years after Russia invaded Ukraine, the Biden administration has imposed an unprecedented array of sanctions, oil price caps and trade curbs designed to weaken Moscow’s war machine.
President Joe Biden signed a sweeping foreign aid bill Wednesday that includes new powers for U.S. officials to locate and seize Russian assets in the United States. It also strengthened America’s ongoing efforts to persuade European allies to free up Russian state assets to help Ukraine.
In its lawsuit against VTB last week in the Southern District of New York, JPMorgan sought to block VTB’s efforts. noting US law prohibits the bank from releasing $439.5 million to VTB.
As a result, JPMorgan will suffer losses of almost half a billion dollars due to compliance with US sanctions.
The American bank, seeking to block VTB’s efforts, said the Russian company had broken its contractual promise to seek relief from American courts by instead finding a friendlier venue in Russia.
JPMorgan said Russian courts have allowed similar actions by Russian lenders against U.S. or European banks on at least a half-dozen other occasions.
JPMorgan said that VTB’s actions caused “certain and irreparable harm.”