By Order No. OD-87, dated 15 January 2016, the Bank of Russia revoked the banking licence of the Moscow-based credit institution Commercial Bank ERGOBANK, limited liability company (CB ERGOBANK LLC) (Registration No. 2856) from 15 January 2016.
The Bank of Russia took such an 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. The bank’s capital adequacy ratios fell below 2%, its equity capital dropped below the minimum amount of the authorised capital established as of the date of state registration of the credit institution. The bank was also unable to satisfy creditors’ monetary claims and was subject to repeated measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ over the past year.
Having bad quality assets CB ERGOBANK LLC failed to make an adequate assessment of risks assumed. The proper assessment of credit risk made at the supervisor’s requirement revealed a full loss of the bank’s equity capital. Due to the loss of liquidity CB ERGOBANK LLC failed to meet its obligations to creditors and depositors on time.
The management and owners of the credit institution failed to take effective measures to bring the situation back to normal. Under these circumstances, the Bank of Russia guided by Article 20 of the Federal Law ‘On Banks and Banking Activities’ fulfilled its duty and revoked the banking licence from CB ERGOBANK LLC.
In pursuance of Bank of Russia Order No. OD-88, dated 15 January 2016, a provisional administration has been appointed to CB ERGOBANK LLC for a term until the appointment of a receiver in accordance with the Federal Law ‘On Insolvency (Bankruptcy)’ or a liquidator in accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In compliance with federal laws the powers of the credit institution’s executive bodies have been suspended.
CB ERGOBANK LLC is a participant in the deposit insurance system. The revocation of the banking licence is recognised as an insured event stipulated by Federal Law No. 177-FZ ‘On Insurance of Household Deposits in Russian Banks’ with regard to the bank’s obligations on household deposits identified in accordance with the procedure established 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 1.4 million rubles per one depositor.
According to reporting data, as of 1 December 2015 CB ERGOBANK LLC ranked 321st in the Russian banking system in terms of assets.