Russian court freezes assets of JP Morgan and Bank of New York

Nearly $1 billion held by the two US financial institutions in the country have been arrested

The Moscow Region arbitration court on Wednesday ordered a freeze on funds belonging to two US banking majors, JP Morgan Chase and The Bank of New York Mellon. The measure reportedly affected nearly 93.5 billion rubles ($1 billion) held by the institutions and their subsidiaries in the country.

The interim measure has been taken under a case filed with the court by Russia’s Prosecutor General late last month. The filing is the latest in a string of cases revolving around the liquidation of the International Reserve Bank (MR Bank), a subsidiary of Russian major Sberbank, by the Ukrainian authorities in early 2022.

At the time of its liquidation, MR Bank held nearly $372 million at the two US banks, including some $250 million with The Bank of New York and $121.1 million with JP Morgan. The funds ended up out of reach of Sberbank, and its main shareholder, the Russian government, due to the actions of the Ukrainian authorities and financial restrictions introduced by the US, the prosecution argued.

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The prosecution asked the court to arrest all the funds held by the two US banks at Citibank Russia, and to ultimately award Sberbank $372 million in damages. The funds have been held in the so-called ‘Type S’ accounts, introduced by Moscow early into the conflict with Ukraine as a countermeasure against Western sanctions. The main purpose of such heavily restricted accounts was the prevention of the movement of the funds out of the country by entities from select “unfriendly nations.”

The Bank of New York has been found in possession of ‘only’ around $66 million in its Type S accounts. Given that the lost funds of the MR Bank have been deemed the subject of joint liability, the rest must be seized from JP Morgan, the prosecution argued.

While the total amount of the frozen funds has not been publicly disclosed, Russian media reports suggested JP Morgan’s Type S accounts hold nearly $919 million, bringing the combined total affected by the arrest to some $985 million.