On revocation of banking licence from credit institution Severo-Vostochny Alliance and appointment of provisional administration
By its Order No. OD-2376, dated 21 August 2017, the Bank of Russia revoked the banking licence from the Moscow-based credit institution Joint-stock Commercial Bank Severo-Vostochny Alliance (joint-stock company) or CB SVA (JSC) (registration No. 2768) from 21 August 2017. According to the financial statements, as of 1 August 2017, the credit institution ranked 250th by assets in the Russian banking system. The bank is not a member of the deposit insurance system.
CB SVA (JSC) failed to timely honour its liabilities to creditors. It resulted in grounds for insolvency (bankruptcy) prevention measures and real threat to creditors’ interests.
The business model of CB SVA (JSC) was aimed at servicing interests of its owners and was of captive nature. High-risk lending to borrowers directly or indirectly related to the ultimate beneficiaries of the credit institution and not engaged in any real business resulted in considerable amount of non-operating assets in the credit institution’s balance sheet. The bank regularly understated the accepted credit risk and avoided meeting the supervisory authority’s demand to create loss provisions adequate to the risks assumed through technical asset transformation.
The Bank of Russia repeatedly applied supervisory measures to CB SVA (JSC), primarily related to creation of additional loss provisions for various assets.
The absence of intentions, on the part of the bank’s owners, to take real measures to stabilise its financial situation points to the total uselessness of the further activities of this credit institution. Under the circumstances, the Bank of Russia has made the decision to withdraw CB SVA (JSC) 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’ interests.
By its Order No. OD-2377, dated 21 August 2017, the Bank of Russia has appointed a provisional administration to CB SVA (JSC) 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.
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