On revocation of banking licence of credit institution Promenergobank and appointment of provisional administration

By its Order No. OD-2524, dated 5 August 2016, the Bank of Russia revoked the banking licence of the Vologda -based credit institution Industrial Energy Bank, joint-stock company, or JSC Promenergobank (Registration No. 2728) from 5 August 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, and the application of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’, taking into account a real threat to creditors’ and depositors’ interests.

JSC Promenergobank implemented a high-risk lending policy connected with the placement of funds in low-quality assets. An adequate assessment of the risks assumed and a reliable recognition of the bank’s assets resulted in the grounds for the credit institution to implement measures to prevent the bank’s insolvency (bankruptcy). Besides, due to the loss of liquidity the credit institution allowed untimely satisfaction of liabilities to creditors. The management and owners of the bank did not take effective measures to normalise its activities. Under the circumstances the Bank of Russia took a decision to withdraw JSC Promenergobank off the banking services market.

By its Order No. OD-2525, dated 5 August 2016, the Bank of Russia

has appointed a provisional administration to JSC Promenergobank for the period until the appointment of a receiver pursuant to the Federal Law ‘On 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 are suspended.

JSC Promenergobank 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.

According to financial statements, as of 1 July 2016, JSC Promenergobank ranked 364th by assets in the Russian banking system.

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05.08.2016 00.00.00