In a statement on its website, the Russian Foreign Ministry
suggested the action, which it called "unacceptable, illegal and
absurd," would have consequences for the U.S. embassy and consulate
One of the highest profile confrontations yet over U.S. sanctions,
the move may increase tensions between Washington and Moscow and add
to U.S. companies' nervousness over doing business in Russia.
"Washington should understand any hostile action against a Russian
diplomatic mission not only constitutes a flagrant violation of
international law but is rife with consequences that will inevitably
effect the work of the embassy and general consulate of the United
States in Russia," Russia's statement said.
The bank said later in its own statement that it is subject to
government regulations and that it "will continue to seek guidance
from the U.S. government on implementing their recent sanctions."
The payment came from Russia's embassy in Kazakhstan to Russian
insurance agency Sogaz, which is partly owned by Abros, according to
the Sogaz website. Abros is a subsidiary of Bank Rossiya, according
to Russian media reports, which is facing U.S. sanctions.
Bank Rossiya was blacklisted by the White House last month as part
of a widening effort to punish Russian President Vladimir Putin's
inner circle over Moscow's role in the Ukraine crisis.
Industry consultants in Moscow have said financial institutions are
unclear about how to apply the new rules in some situations, such as
when dealing with subsidiaries of companies which have either been
sanctioned or which have shareholders that have been punished.
"There is a lot of confusion ... as to what might be the full scope
of the sanctions and what we are hearing is while the sanctions are
specific, a lot of U.S. companies are adopting a much more
risk-averse or cautious approach," said Chris Weafer, partner at
"There is almost self-sanctioning going on."
[to top of second column]
Visa <V.N> and Mastercard <MA.N> briefly cut off services for
clients at Russia's SMP bank, whose main shareholders were affected
by U.S. sanctions, before resuming them shortly thereafter.
"The general rule is that if a company is controlled ... by an
individual on the list, they can't do business with that company,"
one financial consultant said last week, speaking on condition of
"But it's quite a slippery slope regarding the whole holding
structure," the source said.
Russia's accusation could damage relations the bank has with the
country. JPMorgan generated $55.6 million in investment banking fees
in Russia last year, with a 7 percent market share. Worldwide,
JPMorgan recorded $6.4 billion in investment banking fees last year,
according to the company's annual report.
JPMorgan is the biggest U.S. bank by assets and for its size it does
relatively little lending in Russia. At year-end, its loans and
trading positions at risk to Russia totaled $5.4 billion compared
with the company's total assets of $2.4 trillion.
JPMorgan is one of a number of Western banks operating in Russia.
Others which have a presence here include Goldman Sachs <GS.N>, Bank
of America <BAC.N>, Citigroup <C.N> and Morgan Stanley <MS.N>.
(Additional reporting by David Henry in New York;
editing by Andrew
Roche and Chizu Nomiyama)
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