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JPMorgan Chase sues Russia's VTB Bank over effort to unfreeze assets

Published 18/04/2024, 16:50
© Reuters. FILE PHOTO: The logo of VTB bank is seen behind plants at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 15, 2022. REUTERS/Maxim Shemetov/File Photo

By Jonathan Stempel

NEW YORK (Reuters) -JPMorgan Chase sued Russia's state-owned VTB Bank on Thursday to halt its efforts to recover $439.5 million from an account that was blocked after Russia invaded Ukraine and VTB was hit with sanctions.

In a complaint filed in federal court in Manhattan, JPMorgan said VTB filed a lawsuit on Wednesday in Russia to recover the money in "blatant breach" of its agreement to have disputes addressed in New York.

The largest U.S. bank said American law prohibits it from releasing the $439.5 million, and VTB, Russia's second-largest bank, will try to seize its assets abroad if it prevails in the Russia lawsuit.

It said VTB's prospects there were good, with Russian courts having granted at least six other Russian banks relief against American and European banks that were required to comply with sanctions laws.

"Thus, JPMorgan is immediately facing a certain Russian judgment exposing its assets to seizure, without timely or assured recourse, simply because it is abiding, as it must, with U.S. law," JPMorgan's lawyers said.

VTB declined to discuss its lawsuit in Russia, and had no immediate comment on JPMorgan's lawsuit.

The dispute adds to pressures facing VTB, which was put on the U.S. Department of the Treasury's sanctions list in February 2022 following Russia's invasion of Ukraine.

In February, U.S. prosecutors charged VTB Chief Executive Andrey Kostin with criminal sanctions violations related to two yachts he owned and a luxury home in Aspen, Colorado, that he sold.

Kostin had been under U.S. sanctions since 2018.

JPMorgan said VTB opened its correspondent account in 2008 to process U.S. dollar transactions through the American financial system.

It is seeking an injunction barring VTB's lawsuit, calling it necessary to avert "certain and irreparable harm," and requiring that VTB honor its account agreement.

© Reuters. FILE PHOTO: The logo of VTB bank is seen behind plants at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 15, 2022. REUTERS/Maxim Shemetov/File Photo

VTB sued JPMorgan in the Arbitrazh court of the city of Saint-Petersburg and Leningrad region after sending letters in February and March demanding the return of the blocked funds, court records show.

The case is JPMorgan Chase (NYSE:JPM) Bank NA v VTB Bank PJSC, U.S. District Court, Southern District of New York, No. 24-02924.

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