On revocation of banking licence and appointment of provisional administration

By Order No. OD-3182, dated 16 November 2015, the Bank of Russia revoked the banking licence of the Moscow-based credit institution BANK GOROD, joint-stock company (BANK GOROD JSC) (Registration No. 2644) from 16 November 2015.

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. The bank was also unable to satisfy creditors’ monetary claims and was subject to repeated measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’ over the past year.

BANK GOROD JSC failed to make loan loss provisions adequate to risks assumed. Due to the loss of liquidity the credit institution failed to meet its obligations to creditors on time. The bank was also involved in suspicious transactions, including those related to the withdrawal of large amounts of funds abroad.

The management and owners of the credit institution failed to take effective measures to bring the situation back to normal and restore its financial standing. Under these circumstances, the Bank of Russia guided by Article 20 of the Federal Law ‘On Banks and Banking Activities’ fulfilled its duty and revoked the banking licence from BANK GOROD JSC.

In pursuance of Bank of Russia Order No. OD-3183, dated 16 November 2015, a provisional administration has been appointed to BANK GOROD JSC for a term until the appointment of a receiver in accordance with the Federal Law ‘On Insolvency (Bankruptcy)’ or a liquidator in accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’. In compliance with federal laws the powers of the credit institution’s executive bodies have been suspended.

BANK GOROD JSC is a participant in the deposit insurance system. The revocation of the banking licence is recognised as an insured event stipulated by Federal Law No. 177-FZ ‘On Insurance of Household Deposits in Russian Banks’ with regard to the bank’s obligations on household deposits identified in accordance with the procedure established 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 1.4 million rubles per one depositor.

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