On revocation of banking licence from Master-Capital bank and appointment of provisional administration

By its Order No. OD-425, dated 20 February 2018, the Bank of Russia revoked the banking licence from the Moscow-based credit institution Joint Stock Commercial Bank Master-Capital (Registration No. 3011) from 20 February 2018. According to the financial statements, as of 01 February 2018, the credit institution ranked 302^th by assets in the Russian banking system.

Master-Capital’s activity was oriented at servicing the interests of its owner. Lending to borrowers directly or indirectly related to the ultimate beneficiaries of the credit institution resulted in the considerable amount of non-performing assets in the credit institution’s balance sheet. The due diligence check of credit risk at the regulator’s request established a substantial loss of capital and entailed the need for action to prevent the credit institution’s insolvency (bankruptcy), which created a real threat to its creditors’ and depositors’ interests.

The credit institution’s management and owners failed to take effective measures to normalise its activities. As it stands, the Bank of Russia has taken the decision to withdraw Master-Capital from the banking services market.

The Bank of Russia takes this extreme measure — revocation of the banking licence — because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, due to repeated application, within a year, of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, considering a real threat to the creditors’ and depositors’ interests.

By its Order No. OD-426, dated 20 February 2018, the Bank of Russia appointed a provisional administration to Master-Capital for the period until the appointment of a receiver pursuant to the Federal Law ‘On the Insolvency (Bankruptcy)’ or a liquidator under Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In accordance with federal laws, the powers of the credit institution’s executive bodies have been suspended.

Master-Capital is a member of the deposit insurance system. The revocation of the banking licence is an insured event as stipulated by Federal Law No. 177-FZ ‘On the Insurance of Household Deposits with Russian Banks’ in respect of the bank’s retail deposit obligations, as defined by law. The said Federal Law provides for the payment of indemnities to the bank’s depositors, including individual entrepreneurs, in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor.

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