By its Order No. OD-141, dated 21 January 2016, the Bank of Russia revoked the banking licence from the Moscow-based credit institution Foreign Economic Industrial Bank, limited liability company, or Vneshprombank LLC (Registration No. 3261) from 21 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, capital adequacy below 2%, decrease in equity capital below the minimum amount of the authoruised capital established as of the date of the state registration of the credit institution, repeated violations within a year of the requirements of Articles 6 and 7 (except for Clause 3 of Article 7) of the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’ and the related Bank of Russia regulations, and application of supervisory measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
The joint analysis of financial position of Vneshprombank LLC held by the Bank of Russia and the state corporation Deposit Insurance Agency revealed that the bank’s liabilities exceeded its assets by about 187.4 billion rubles.
The management of Vneshprombank LLC conducted various operations to withdraw assets over the extended period. The statements presented to the Bank of Russia did not bear the reliable information on the quality and value of the bank’s assets and liabilities. The management of Vneshprombank LLC distorted the reporting through falsifying primary accounting documents, including non-resident banks’ correspondent account statements, customers’ credit histories, and customer transaction statements.
In addition, the credit institution did not comply with the requirements of the legislation on anti-money laundering and the financing of terrorism in terms of timely notification of the authorised body about operations subject to obligatory control, among other things.
The considerable gap between assets and liabilities makes the financial resolution of Vneshprombank LLC by the state corporation Deposit Insurance Agency and its creditors impossible on reasonable economic terms. In these circumstances, pursuant to Article 20 of the Federal Law ‘On Banks and Banking Activities’, the Bank of Russia revoked the banking licence from the credit institution.
The Bank of Russia makes efforts to provide law enforcement agencies with the information required to establish persons responsible for the unlawful actions.
Vneshprombank LLC is a member of the deposit insurance system. The revocation of banking licence is an insured event envisaged by Federal Law No. 177-FZ ‘On Insurance of Household Deposits with Russian Banks’ regarding the bank’s obligations on deposits of households determined in accordance with the legislation. This Federal Law provides for the payment of insurance indemnity to the bank’s depositors, including individual entrepreneurs, in the amount of 100% of their balances but not exceeding the total of 1.4 million rubles per depositor.
According to the financial statements, as of 1 January 2016, Vneshprombank LLC ranked 40th by assets in the Russian banking system.