A Russian court ordered the seizure of roughly $439.5 million that state-owned VTB Bank held in JPMorgan Chase accounts in the country, according to a filing seen Wednesday by Reuters and CNBC.
The court order permits the funds in JPMorgan’s Russian accounts to be seized, along with “movable and immovable property,” including correspondent accounts and the U.S. bank’s stake in a Russian subsidiary, CNBC reported.
The ongoing legal battle revolves around funds frozen in the wake of Russia’s invasion of Ukraine and subsequent sanctions. Under U.S. sanctions law, neither bank can access the funds.
VTB filed a lawsuit last week in Saint Petersburg against JPMorgan, seeking to freeze an equivalent amount of the U.S. bank’s assets in Russia. VTB accused JPMorgan of planning to leave Russia and refusing to pay any compensation related to the blocked funds.
JPMorgan countersued VTB in New York the next day, aiming to halt the seizure of its assets in Russia. JPMorgan argued that it could not reclaim VTB’s trapped funds in the U.S. to compensate for the losses likely arising from the Russian lawsuit.
JPMorgan further said in its complaint that VTB’s attempt to recoup the money through a Russian court was a “blatant breach” of the banks’ agreement to settle the dispute in New York City.
JPMorgan declined to comment Wednesday to CNBC and Reuters. VTB did not immediately respond to the publications’ request for comment.
JPMorgan CEO Jamie Dimon, in his 2022 annual shareholder letter, said that as the bank follows Western directives in implementing the sanctions against Russia, it “could still lose about $1 billion over time.”
JPMorgan and Goldman Sachs declared their intention to wind down their Russia operations in March 2022. Citi announced months later that it would wind down its consumer-banking and local commercial-banking operations in the country. The moves followed sanctions the Treasury Department’s Office of Foreign Assets Control imposed on VTB and Sberbank — which together, at the time, held more than half of the country’s banking system assets.
Last year, a Russian court froze about $36 million worth of assets owned by Goldman Sachs. The order followed a lawsuit by state-owned Otkritie bank, claiming that Goldman refused to honor a swap contract, citing the sanctions rule and highlighting the American lender’s decision to leave Russia.
Any exit from Russia might take more than a year because it requires President Vladimir Putin’s approval, according to the Financial Times. To date, seven of the 45 financial institutions operating in the country in 2022 have received approval, the publication noted.
In a separate incident, the Justice Department in February charged VTB CEO Andrey Kostin with two counts of violating the International Emergency Economic Powers Act, two counts of conspiracy to violate that law, and one count of conspiracy to commit international money laundering.
He called the charges “groundless” and said he never violated any legislation.
