Russian court freezes funds of US banks JP Morgan and Mellon, 2 October 2024

The Moscow Region Arbitration Court...froze funds of the U.S. Bank of New York Mellon held by the Russian branch of Citibank as well as funds of JP Morgan Chase held by its Russian affiliate of Morgan Chase Bank amounting in total to about $372 million.

The court decision said the action was initiated by Russia's deputy prosecutor "in defence of the interests of the Russian Federation" in connection with the Ukrainian central bank's withdrawal of the licence of MR bank with plans to wind up the bank by 2025.

The prosecutor's office launched the action late last month against Ukrainian regulators and the two U.S. banks - Bank of New York Mellon and JP Morgan Chase Bank recognising the action as "expropriation" of the property of MR bank - Ukrainian subsidiary of Russia's largest bank, Sberbank. It said the action infringed the state's lawful interests.

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 securе its own income from the activity abroad of MR bank."

Both Sberbank and JP Morgan declined to comment on the court action.