Press Service

The Central Bank of the Russian Federation (Bank of Russia)

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;
www.cbr.ru

Information Notice

Banking licence of INKAROBANK revoked and provisional administration appointed

By its Order No. OD-2849, dated 31.10.2018, the Bank of Russia revoked the banking licence from the Moscow-based credit institution Joint-stock Commercial Bank INKAROBANK (joint-stock company) or INKAROBANK (JSC) (Registration No. 2696) from 31.10.2018. According to its financial statements, as of 01.10.2018, the credit institution ranked 340th by assets in the Russian banking system.

The priority activity of INKAROBANK was lending to individuals and legal entities at the cost of funds borrowed from households (roughly 60% of the bank’s balance sheet). At the same time, the quality of over 50% of loans was dubious. The due diligence check of credit risk at the regulator’s request established a substantial (nearly twofold) decrease in capital and consequently entailed the need for action to prevent the credit institution’s insolvency (bankruptcy), which created a real threat to its creditors’ and depositors’ interests.

Besides, in order to conceal the real financial position of the credit institution and to formally comply with prudential requirements, during the current year INKAROBANK has systemically performed opaque transactions to artificially maintain the equity capital.

The Bank of Russia had repeatedly (8 times over the last 12 months) applied supervisory measures against INKAROBANK including two impositions of restrictions and one ban on household deposit taking. The credit institution also violated restrictions to perform other activities imposed to protect the interests of its creditors and depositors and obstructed the Bank of Russia’s inspection.

The credit institution’s operations showed signs of misconduct by the management who conducted transactions aimed at the withdrawal of liquid assets to the detriment of creditors’ and depositors’ interests. The Bank of Russia will submit to law enforcement agencies information about the transactions conducted by the Bank bearing signs of a criminal offence.

Under these circumstances, the Bank of Russia took the decision to revoke the banking licence from INKAROBANK.

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.

Following banking licence revocation, INKAROBANK’s professional securities market participant licence was also cancelled.

By its Order No. OD-2850, dated 31.10.2018, the Bank of Russia has appointed a provisional administration to INKAROBANK 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 were suspended.

INKAROBANK 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 depositor.

31 October 2018

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