Russian Court Freezes $372 Million in BNY and JPMorgan Chase Assets

Reuters reported late Wednesday that a Moscow court has frozen $372 million in assets held by Bank of New York Mellon and JPMorgan Chase. The funds were held in accounts at the Russian branches of Citibank and JPMorgan Chase Bank. The court order, issued Wednesday (Oct. 2), was sought by Russia’s deputy prosecutor, who claimed the action was necessary to “defend the interests of the Russian Federation.” The prosecutor’s office alleged that the funds are linked to the Ukrainian central bank’s decision to revoke the license of MR Bank, a subsidiary of Russia’s SberBank.

According to Reuters, the prosecutor’s office sought recognition of $121 million placed by MR bank in an account of JP  Morgan Chase as the rightful property of SberBank and $251 million placed in an account of the Bank of New York Mellon — amounting to a total sum of damages of $372 million.

According to court documents, the action resulted in SberBank being denied judicial control over its subsidiary and the right to dispose of its income, meaning that the state “lost the opportunity” to secure its own income from the activity abroad of MR bank.

The case centers around allegations that the Ukrainian central bank’s actions against MR Bank amounted to “expropriation” of SberBank’s property. The Russian prosecutor’s office argues that this move deprived SberBank of control over its subsidiary and the associated income, ultimately harming the Russian state’s financial interests.

Neither bank had officially responded by late Wednesday evening.

Related: Russian Central Bank Pulls Amex Subsidiary’s Banking License

The move marks the second asset freeze of a U.S. entity by a Russian court. As Bloomberg reported in early August, Goldman Sachs was also served notice by a Russian court. At that time a Moscow court froze $36 million worth of the bank’s shares in Russian companies, including a significant stake in retailer Detsky Mir PJSC. This action stems from a lawsuit filed by Otkritie Bank, a Russian lender, alleging that Goldman Sachs failed to honor a swap contract due to sanctions imposed on Russia following its invasion of Ukraine.

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