Moscow Region Arbitration Court Freezes U.S. Bank Funds

(Reuters) – The Moscow Region Arbitration Court has frozen approximately $372 million in funds held by the U.S. Bank of New York Mellon and JP Morgan Chase, as initiated by Russia’s deputy prosecutor.

Background

The action was taken to defend the interests of the Russian Federation following the Ukrainian central bank’s withdrawal of MR Bank’s license, which plans to wind up by 2025.

Legal Action

Late last month, the prosecutor’s office initiated proceedings against Ukrainian regulators and the two U.S. banks, viewing the situation as “expropriation” of MR Bank’s property, a subsidiary of Russia’s Sberbank.

The prosecutor’s office aimed to recognize $121 million from JP Morgan and $251 million from the Bank of New York Mellon as lawful property of Sberbank, totaling $372 million in damages.

According to court documents, this action denied Sberbank judicial control over its subsidiary and the right to manage its income, resulting in the state losing potential income from MR Bank’s activities abroad.

Responses

Both Sberbank and JP Morgan declined to comment on the matter.