Banking licence of JSC Kranbank revoked
By its Order No. OD-2850, dated 13 December 2019, the Bank of Russia revoked the banking licence of the Ivanovo-based Joint-stock Company Kranbank, or JSC Kranbank (Reg. No. 2271; hereinafter, Kranbank). The credit institution ranked 204th by assets in the Russian banking system.1
The Bank of Russia took this decision in accordance with Clauses 6 and 6.1, Part 1, Article 20 of the Federal Law ‘On Banks and Banking Activities’,2 based on the facts that Kranbank:
- failed to comply with Bank of Russia regulations on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism. The credit institution submitted to the authorised body incorrect information about operations subject to obligatory control;
- conducted operations indicative of intention to siphon off assets;
- understated the amount of loan loss provisions to be created. The Bank of Russia estimates that an adequate reflection in the credit institution’s financial statements of risks taken will lead to a significant (over 45%) decrease in capital and, consequently, to grounds to take measures to prevent the credit institution’s insolvency (bankruptcy), which creates a real threat to the interests of its creditors and depositors;
- violated federal banking laws and Bank of Russia regulations, due to which the regulator repeatedly applied supervisory measures against it over the past 12 months, which included restrictions on household deposit-taking.
The Bank of Russia’s inspection revealed that most of Kranbank’s assets were impaired. The credit institution received an order to make a proper assessment of risks assumed and to reflect its real financial standing in the financial statements.
Kranbank made large-value payments under its lease agreements, implying the attempt to siphon off assets. The non-market conditions of these transactions forced the credit institution to make advance payments, which considerably exceeded the cost of leased real estate. The Bank of Russia submitted information about the credit institution’s transactions suggesting a criminal offence to law enforcement agencies.
The Bank of Russia appointed a provisional administration3 to Kranbank for the period until the appointment of a receiver4 or a liquidator.5 In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
The State Corporation Deposit Insurance Agency (hereinafter, the Agency) involved JSC Zarubezhenergoproekt and Kranbank to act as investors in the bankruptcy prevention measures for JSC CB Solidarnost. Following the revocation of the banking licence of Kranbank, JSC Zarubezhenergoproekt will act independently as an investor under the Plan for the Agency to participate in bankruptcy prevention measures for JSC CB Solidarnost.
Information for depositors: Kranbank is a participant in the deposit insurance system; therefore depositors6 will be compensated for their deposits in the amount of 100% of the balance of funds but no more than a total of 1.4 million rubles per depositor (including interest accrued).
Deposits will be repaid by the Agency. For details of the repayment procedure, depositors may call the Agency’s 24/7 hotline
1 According to the financial statements as of 1 December 2019.
2 The Bank of Russia took this measure following the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations, within a year, of Bank of Russia regulations issued in accordance with the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’, and multiple applications, within a year, of measures stipulated by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, and taking into account a real threat to the interests of creditors and depositors.
3 In accordance with Bank of Russia Order No. OD-2851, dated 13 December 2019.
4 In accordance with Articles 127 and 189.68 of the Federal Law ‘On Insolvency (Bankruptcy)’.
5 In accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’.
6 Depositors mean individuals, including those who are engaged in entrepreneurial activity (individual entrepreneurs), and legal entities that are considered small businesses in accordance with the Federal Law ‘On the Development of Small and Medium-sized Enterprises in the Russian Federation’.
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