Moscow: Court cancels seizure of JP Morgan funds in VTB dispute

A Russian court has cancelled the seizure of part of JP Morgan’s assets in an ongoing dispute with a Russian bank over sanctioned money.

Back in April, VTB launched legal action against JP Morgan Chase in Russia over $439m held in the US bank’s New York branch which had been blocked due to sanctions.

The proceedings included London-listed JP Morgan Emerging Europe, Middle East & Africa (JEMA).

The funds in the ‘S’ account were frozen after the introduction of sanctions arising from Russia’s invasion of Ukraine in 2022.

The case was filed to the Arbitration Court of St Petersburg and the Leningrad Region.

VTB also applied for and obtained interim relief in the form of a freezing order in support of its claim.

The Moscow court said it had ordered the seizure of all funds in JP Morgan bank accounts in Russia, including correspondent accounts and those opened in the name of a subsidiary.

According to Reuters, JP Morgan has 243.3bn roubles ($2.64bn) of assets in Russia of which most are in type C accounts.

The US bank stated that the order applies to the onshore funds in the bank accounts and securities owned by the relevant JP Morgan defendants, including JEMA, up to the value of VTB’s claim, and assets were frozen.

In response to the claim, JEMA updated its UK shareholders to say the firm’s Russian subsidiary applied to the court for the freezing order to be lifted and JP Morgan Chase had obtained an urgent order from the New York courts requiring VTB to discontinue the proceedings.

Earlier this month, JEMA updated the London Stock Exchange to state that the Russian courts confirmed that funds held in ‘S’ accounts at JP Morgan’s Russian subsidiary were not subject to the freezing order nor the civil proceedings brought by VTB.

Meanwhile, on Friday morning, following a court hearing on 22nd May in Russia, it was confirmed that JEMA’s assets (both securities and funds) held in ‘S’ accounts in the name of JP Morgan Bank International, its Russian subsidiary, are not subject to the previously mentioned freezing order and the civil proceedings being brought by VTB in the Russian courts,

The US bank company manager stated: “We will continue to monitor the proceedings and update you on relevant developments.”

After the announcement of the legal action in April, JEMA share price in London dropped from 126.50 to 89.5. It has since slightly recovered to 97.5, as of Thursday’s trading price.