Following the news that Goldman Sachs (NYSE:GS) was exiting operations in Russia, JPMorgan (NYSE:JPM) is reportedly doing the same. The move follows heavy economic sanctions targeting Russia by many countries around the world following Russia’s draconian invasion of Ukraine.
JPMorgan Chase is the largest bank in the United States by assets, operating around the world.
A company spokesperson told CNBC they were making the move in compliance with directives by the governments around the world.
“We have been actively unwinding Russian business and have not been pursuing any new business in Russia.”
The bank said it has limited operations in Russia and less than 200 employees.
According to the JPM Russia home page, the bank “provides a wide range of financial and banking services for legal entities, including opening and maintaining bank accounts, conversion operations, money market operations, operations with securities and derivative financial instruments, custody services, trade finance.” The bank states that it does not provide services to individuals.
Yesterday, JPM posted an update on the situation in Russia stating “the Russian economy is headed for a deep recession and the imposition of capital controls.”
“While there is some room for Russia to use its gold reserve and divert trade to China, Russia’s financial system is set to come under enormous stress as it will struggle to meet its financing obligations despite running a current account surplus. Downward pressure on the ruble and capital flight have pushed the central bank of Russia to raise rates dramatically and impose capital controls. J.P. Morgan Research forecasts that Russia’s economy will contract 35% quarter-over-quarter and seasonally adjusted in the second quarter, and for the year experience a GDP contraction of at least 7%. Inflation could end the year at around 14%, up from 5.3% forecasted before the crisis, with risks skewed heavily to the upside due to ruble depreciation and import shortages.”
JPM noted that sanctions were applied to Russia’s central bank which impacts the country’s more than $600 billion of foreign-currency reserves, impacting the country’s ability to stabilize the ruble.
The bank reported that around 15% of Russia’s exports are settled in ruble; around 55% are settled in USD and 30% in other hard currencies.