In compliance with the U.S. sanctions imposed on Russia, JPMorgan Chase & Co. (JPM) recently blocked money transfer from a Russian embassy to an insurance agency. This has evoked strong reaction from the Russian Foreign Ministry.
The required amount was to be transferred from a Russian embassy in Kazakhstan to Russian insurance firm Sogaz, which is partially owned by Abros. Abros is a subsidiary of Bank Rossiya, which has been blacklisted by the U.S. government. This prompted JPMorgan to stop the remittance.
However, the move has intensified tensions between the two countries, with the Russian Foreign Ministry’s statement that the action was uncalled for and illegal. Further, the Ministry declared that the U.S. Embassy and Consulate in Russia could face adverse consequences for this.
Notably, JPMorgan eventually stated that it would seek approval from regulators to process the money transfer, as the company was obliged to follow the U.S. government regulations.
The sanctions were imposed on Russia last month, following the crisis in Ukraine and Russia’s integration of Crimea. Many Russian companies were blacklisted as part of the U.S. government’s measures to reprimand Russian President Vladimir Putin and his allies for their role in the Ukraine crisis.
Nevertheless, JPMorgan, which has considerable presence in Russia, could have to stop executing business in Russia, following the latest step undertaken by it. The company recorded $55.6 million as investment banking fees in Russia in 2013.
Other than JPMorgan, other major U.S. banks with a presence in Russia include The Goldman Sachs Group, Inc., Bank of America Corp. (BAC), Citigroup Inc. (C) and Morgan Stanley (MS). Financial institutions have been growing increasingly concerned as to how to deal with these sanctions.
If the political tension between the U.S. and Russia continues, it will adversely affect American companies that have operations in Russia. Though Russia is not very important for JPMorgan in terms of revenue generation, the company could face difficulties in its business there, if matters do not ease soon.
Currently, JPMorgan carries a Zacks Rank #3 (Hold).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment