JP Morgan has severed correspondent banking ties with two of Russia’s largest banks, Sberbank and VTB, according to Russian media reports on the eve of the 2014 Winter Olympics in Sochi.
The move by JP Morgan to distance itself from the two banks, which was first reported in the Russian financial daily Kommersant Thursday, came in January, when, a source told the newspaper, JP Morgan instituted transparency standards so strict they were “impossible,” thus forcing Sberbank and VTB to seek other correspondent banking partners. Sberbank has since selected Bank of America and Bank of New York to replace JP Morgan, while VTB has selected Bank of America and Citi as its correspondent banking providers.
The Kommersant story called JP Morgan’s decision “understandable” given the fact that its run into so much legal trouble in the last year, eventually settling with the U.S. Justice Department for $13 billion last fall, and that its ties to Bernie Madoff cost it another $2.2 billion in legal settlements. But the story questions why JP Morgan would cut its ties with only Sberbank and VTB, and not the myriad other Russian banks it has correspondent banking relationships with, such as Promsvyazbank.
One Russian financial industry expert said JP Morgan’s move is “quite a slap in the face for two of Russia’s biggest state banks not to be able to move dollars because they are so crooked.”
JP Morgan would not comment.
- More than 700 refugees and migrants are feared dead following three shipwrecks in the Mediterranean Sea.
- Dozens were arrested at a Trump rally in San Diego as protesters clashed with supporters. Trump thanked police for "handling the thugs."
- The World Health Organization has dismissed calls to postpone or cancel this summer's Olympic Games in Rio de Janeiro because of the Zika virus.