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LONDON - Russian bank VTB has filed an application to retain dividends due on equity positions held through JPMorgan Chase Bank accounts to offset a $439 million judgment against JPMorgan Emerging Europe, Middle East & Africa Securities PLC (JEMA) and eight other J.P. Morgan entities, according to a company statement released Thursday.
A Russian court granted VTB’s application on July 23, one day before the scheduled dividend payment date. J.P. Morgan is taking legal steps to challenge this ruling and has stated it will credit clients with the dividends if funds become available.
The dispute stems from a lawsuit filed by VTB Bank against JEMA and other J.P. Morgan entities in Russia. J.P. Morgan has appealed the $439 million judgment, with the appeal hearing rescheduled to September 10.
JEMA Chairman Eric Sanderson noted that dividends from Russian securities in the company’s portfolio are currently held in a custody ’S’ account in Moscow. As of August 13, this account held approximately £43.2 million, but the company has warned that "there is no certainty that the sums in the ’S’ account will ever be received by the Company."
An additional £9.7 million in announced dividends remains outstanding, including approximately £850,000 due from VTB Bank. JEMA has not received any dividends from VTB Bank to date.
These Russian-held dividends are not recognized in JEMA’s net asset value or income statement due to the uncertainty surrounding their eventual receipt.
The London Stock Exchange-listed company said its board will provide further updates as the legal proceedings continue.
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