Banking licence of Russian Mortgage Bank revoked and provisional administration appointed
By its Order No. OD-3033, dated 23 November 2018, the Bank of Russia revoked the banking licence of the Moscow-based credit institution Commercial Bank Russian Mortgage Bank (Limited Liability Company), or CB Russian Mortgage Bank LLC (Registration No. 1968) from 23 November 2018.
CB Russian Mortgage Bank LLC failed to comply with laws and Bank of Russia regulations on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism with regard to identifying operations subject to mandatory control, as well as submitting reliable information to the authorised body. Moreover, the credit institution was involved in dubious transit operations.
In November 2018, a massive customer outflow (approx. 50% of corporate customers’ funds) caused a serious liquidity strain that deteriorated financial standing of CB Russian Mortgage Bank LLC. For this reason the bank could not honour its liabilities to customers in due time. The specifics of the credit institution’s operations therefore necessitated action to prevent its insolvency (bankruptcy); there arose a real threat to its creditors’ and depositors’ interests.
The Bank of Russia repeatedly (3 times over the last 12 months) applied supervisory measures against CB Russian Mortgage Bank LLC, including two impositions of restrictions on household deposit taking.
However, the management and owners of the credit institution failed to take effective measures to normalise its activities. Moreover, the management showed signs of misconduct, that is, of withdrawal of liquid assets to the detriment of creditors’ and depositors’ interests. The Bank of Russia submitted information about the bank’s transactions bearing signs of a criminal offence to law enforcement agencies.
Under these circumstances, the Bank of Russia took the decision to revoke the banking licence of CB Russian Mortgage Bank LLC.
The Bank of Russia took this decision following the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within a year of the requirements stipulated by Articles 6 and 7 (excluding Clause 3 of Article 7) of the Federal Law ’On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’ as well as Bank of Russia regulations issued in accordance with the said law and application of the measures stipulated by the Federal Law ’On the Central Bank of the Russian Federation (Bank of Russia)’, taking into account a real threat to the interests of creditors and depositors.
Following the banking licence revocation, the professional securities market participant licence of CB Russian Mortgage Bank LLC was cancelled.
By its Order No. OD-3034, dated 23 November 2018, the Bank of Russia appointed a provisional administration to CB Russian Mortgage Bank LLC for the period until the appointment of a receiver pursuant to the Federal Law ‘On 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 were suspended.
CB Russian Mortgage Bank LLC is a member of the deposit insurance system. The revocation of a banking licence is an insured event as stipulated by Federal Law ‘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.
According to its financial statements, as of 1 November 2018, the credit institution ranked 179th by assets in the Russian banking system.
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