In a recent development, the Moscow Region Arbitration Court made a significant move by freezing 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, totaling around $372 million. This action was taken in response to Russia’s deputy prosecutor initiating a defense of the country’s interests in connection with the Ukrainian central bank withdrawing the license of MR bank and planning to wind up the bank by 2025.
The prosecutor’s office’s action, which took place late last month, targeted Ukrainian regulators and the two U.S. banks, Bank of New York Mellon and JP Morgan Chase Bank, citing “expropriation” of the property of MR bank – a Ukrainian subsidiary of Russia’s largest bank, Sberbank. The office claimed that this action infringed on the state’s lawful interests.
Specifically, 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, along with $251 million placed in an account of the Bank of New York Mellon – culminating in total damages of $372 million. Court documents revealed that this action resulted in Sberbank being denied judicial control over its subsidiary and the right to dispose of its income, causing the state to “lose the opportunity to secure its own income from the activity abroad of MR bank.”
Both Sberbank and JP Morgan declined to comment on the court action. This legal tussle highlights the complexities of international banking regulations and the need for financial institutions to navigate various legal landscapes to protect their assets and interests. Stay tuned for more updates on this developing story.