On the revocation of banking licence and appointment of provisional administration

By Order No. OD-411, dated 26 March 2014, the Bank of Russia revoked the banking licence of the Moscow-based credit institution Commercial Bank Sovinkom, a limited liability company (CB Sovinkom Ltd) (Registration Number: 2302) from 26 March 2014.

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, taking into account the repeated application over the past year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.

CB Sovinkom Ltd failed to make loan loss provisions commensurate with the risks assumed and failed to comply with the supervisor’s requirements. The credit institution was involved in dubious transactions, the amount of which exceeded 6.8 billion rubles in 2013. CB Sovinkom’s internal control rules in the field of countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism did not correspond to the Bank of Russia’s requirements. The management and owners of the credit institution failed to take effective measures to bring the situation back to normal.

In pursuance of Bank of Russia Order No. OD-412, dated 26 March 2014, a provisional administration has been appointed to CB Sovinkom Ltd for a term until the appointment of a receiver in accordance with the Federal Law ‘On the Insolvency (Bankruptcy) of Credit Institutions’ 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.

CB Sovinkom Ltd 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 to honour household deposits identified in accordance with the procedure established by law.

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26.03.2014 00.00.00