A Russian court has frozen approximately $372 million in funds belonging to two major U.S. banks, JP Morgan Chase and Bank of New York Mellon, held in Russian financial institutions. The move comes amid a complex legal dispute involving a Ukrainian subsidiary of Russia’s largest bank, Sberbank.
The Moscow Region Arbitration Court ordered the freeze Wednesday, targeting funds of Bank of New York Mellon held by Citibank’s Russian branch and JP Morgan Chase funds in its Russian affiliate. The court action stems from a case brought by Russia’s deputy prosecutor general “in defense of the interests of the Russian Federation.”
At the heart of the dispute is the Ukrainian central bank’s decision to revoke the license of MR bank, a Ukrainian subsidiary of Sberbank, with plans to liquidate the bank by 2025. Russian prosecutors view this action as an “expropriation” of Sberbank’s property.
The prosecutor’s office initiated legal proceedings late last month against Ukrainian regulators and the two U.S. banks. They sought recognition of $121 million in an account at JP Morgan Chase and $251 million at Bank of New York Mellon as rightful property of Sberbank, totaling $372 million in claimed damages.
Court documents reveal that the prosecutors argue the Ukrainian action denied Sberbank judicial control over its subsidiary and the right to its income. This allegedly resulted in Russia losing “the opportunity to secure its own income from the activity abroad of MR bank.”
The case highlights the ongoing financial tensions between Russia and Ukraine, with international banks caught in the crossfire. It also underscores the challenges facing global financial institutions operating in regions with complex geopolitical relationships.
Both Sberbank and JP Morgan declined to comment on the court action when contacted by reporters.
The court’s decision adds another layer of complexity to the already strained economic relations between Russia and Western financial institutions amid ongoing international sanctions and geopolitical tensions.
reuters
