Sanctions Showdown: JPMorgan Trapped in Russia-US Tug-of-War, Billions at Stake

JPMorgan Chase is caught in U.S-Russia sanctions war after overseas court orders $440 million seized from bank

Following the invasion of Ukraine, a Russian court has ruled in favor of VTB Bank in its attempt to recover $439.5 million from JPMorgan Chase.

VTB alleges that JPMorgan froze these funds in U.S. accounts after the invasion.

As a result of the court’s order, JPMorgan’s Russian accounts have been seized along with its stake in a Russian subsidiary.

VTB had filed a lawsuit in a St. Petersburg court last week, seeking compensation for the frozen funds and requesting assistance due to JPMorgan’s stated intention to exit Russia.

The next hearing in the Russian case is scheduled for July 17.

JPMorgan refrained from commenting, while VTB has yet to respond to CNBC’s request for a statement.

This incident highlights the difficult position faced by American banks, who must navigate conflicting demands from Western sanctions regimes and their overseas interests.

Following Russia’s invasion of Ukraine, the Biden administration enacted a stringent set of sanctions, aiming to weaken Russia’s military capabilities.

In a separate lawsuit filed in the Southern District of New York last week, JPMorgan attempted to thwart VTB’s efforts by invoking U.S. law, which prohibits the release of VTB’s funds.

However, JPMorgan may now face a loss of almost half a billion dollars due to its compliance with U.S. sanctions.

JPMorgan has also raised concerns about the possibility of Russian courts favoring Russian lenders in similar disputes against American or European banks.

The American bank contends that VTB’s actions inflict “certain and irreparable harm” on JPMorgan.