Press Service

On revocation of banking licence from credit institution RESERV and appointment of provisional administration

By its Order No. OD-2240, dated 9 August 2017, the Bank of Russia revoked the banking licence from the Chelyabinsk-based credit institution THE BANK FOR SOCIAL DEVELOPMENT RESERV (STOCK COMPANY) or BANK RESERV (SC) (Registration No. 2364) from 9 August 2017. According to the financial statements, as of 1 July 2017, the credit institution ranked 415^th by assets in the Russian banking system.

The operations of BANK RESERV (SC) bear elevated credit risks. The supervisory authority has repeatedly requested the bank to create additional provisions. In June and July this year, the Bank of Russia’s supervisory efforts revealed in the credit institution operations aimed at replacement of high-quality liquid assets with dubious assets. Furthermore, the Bank of Russia revealed circumstances pointing to the bank’s efforts to conceal the loss of considerable funds. The creation of additional loss provisions resulted in the considerable decline in the bank’s capital and its operations show reasons for bankruptcy (insolvency) prevention measures.

The Bank of Russia repeatedly applied supervisory measures to BANK RESERV (SC), including three impositions of restrictions on household deposit taking.

The bank’s management disassociated themselves from solving the problems, which points to a lack of prospects for bringing its activity back to normal. Under the circumstances, the Bank of Russia took the decision to withdraw BANK RESERV (SC) 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-2241, dated 9 August 2017, the Bank of Russia has appointed a provisional administration to BANK RESERV (SC) 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.

BANK RESERV (SC) 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 one depositor.