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A Russian court has ordered the seizure of JPMorgan Chase’s funds totaling $439.5 million a week after Kremlin-run lender VTB launched legal action against the largest U.S. bank to avoid being stranded under Washington’s sanctions regime to get funds back.
The move highlights the impact the punitive measures against Moscow are having on some Western companies. It is also further evidence of the difficulties Western lenders face as they try to meet their commitments 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, is directed against funds in the accounts of JPMorgan and shares of its Russian subsidiaries, following the ruling of the Arbitration Court in St. Petersburg. The assets were frozen by the authorities as part of Western sanctions.
The dispute centers on funds totaling around $439 million that VTB held in a JPMorgan account in the United States. When Washington imposed sanctions on the Kremlin-run bank, JPMorgan had to transfer the funds to a separate escrow account. Under the US sanctions regime, neither VTB nor JPMorgan have access to the funds.
In response, VTB filed a lawsuit against the New York-based group last week, seeking to force Russian authorities to freeze the corresponding amount in Russia, warning that JPMorgan wanted to leave Russia and would refuse to pay compensation .
The following day, JPMorgan filed its own lawsuit in a U.S. court against the Russian lender to prevent a seizure of its assets, arguing that it had no way to recover VTB’s stranded U.S. funds to cover its own potential losses to compensate for the Russian lawsuit.
JPMorgan and VTB declined to comment on the ruling.
When JPMorgan and Goldman Sachs announced their intention to close their operations in Russia, which represented only a small part of their global operations, experts warned that an exit could take more than a year. Other Western banks, including Citigroup, Italy’s UniCredit and Austria’s Raiffeisen Bank International, still operate in Russia.
Since a decree issued in 2022, exiting Russia has required the approval of President Vladimir Putin himself. Seven banks – out of 45 operating in the country at the time – received presidential approval, including Mercedes-Benz Bank, Ikano, J&T and Intesa.
In early 2022, Russia also banned shareholders from “unfriendly countries,” including the United States, from deducting their dividends.
Last summer, a Russian court froze about $36 million in Goldman assets after state-owned bank Otkritie filed a lawsuit. 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 assets of Volkswagen in Russia worth $204 million, pending a lawsuit from former partner Gaz Group, owned by sanctions-hit oligarch Oleg Deripaska. The assets were later released when VW received permission from Russian authorities to sell its Russian business to Avilon, one of the country’s largest car dealers.
Additional reporting by Ortenca Aliaj in London