The Moscow Region Arbitration Court has frozen approximately $372 million in funds belonging to the U.S. Bank of New York Mellon and JP Morgan Chase Bank held by their Russian affiliates. This decision was made public on Wednesday and stems from actions initiated by Russia’s deputy prosecutor.
Legal Action in Defense of State Interests
The court’s ruling was prompted by concerns related to the Ukrainian central bank’s withdrawal of the license from MR Bank, a subsidiary of Russia’s largest bank, Sberbank, which plans to wind up operations by 2025. The prosecutor’s office filed the action against the Ukrainian regulators and the two U.S. banks, labeling the situation as “expropriation” of MR Bank’s assets and claiming that the action infringed upon the lawful interests of the Russian state.
Breakdown of the Frozen Funds
In the court documents, the prosecutor’s office requested that $121 million, which was deposited by MR Bank in a JP Morgan Chase account, be recognized as rightful property belonging to Sberbank. Additionally, it sought recognition for $251 million in an account held at the Bank of New York Mellon. This brings the total amount claimed to $372 million.
Implications for Sberbank
According to the legal filings, the actions taken by the Ukrainian regulators have led to Sberbank being denied judicial control over MR Bank, as well as the ability to manage its income. This effectively means that the state “lost the opportunity to secure its own income from the activity abroad of MR Bank.”
Responses from the Banks
Both Sberbank and JP Morgan Chase have declined to comment on the court’s decision and the ongoing legal proceedings.
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