On appointing the Deposit Insurance Agency to perform the functions of the provisional administration of JSCB Spurt (PJSC) and on imposing moratorium on meeting the bank’s creditor claims

Due to the unstable financial position of Joint-stock Commercial Bank Spurt (Public Joint-stock Company) (Registration No. 2207) and considering the existence of a threat to creditors’ and depositors’ interests, by its Order No. OD-1136, dated 28 April 2017, the Bank of Russia appointed the state corporation Deposit Insurance Agency (hereinafter, the Agency) to perform the functions of the provisional administration of the bank for a six-month term from 28 April 2017.

The powers of shareholders connected with participation in the authorised capital and the powers of managing bodies of JSCB Spurt (PJSC) are suspended for the period of provisional administration activity.

The key objective of the provisional administration is to carry out an inspection of the bank’s financial position.

At the same time, due to the failure to meet creditors’ claims on monetary obligations within seven days from their maturity date and guided by Article 189³⁸ of Federal Law No. 127-FZ, dated 26 October 2002, ‘On Insolvency (Bankruptcy)’, by its Order No. OD-1137, dated 28 April 2017, the Bank of Russia imposed a moratorium on meeting creditors’ claims with respect to JSCB Spurt (PJSC) for a three-month term starting 28 April 2017.

Deterioration in the bank’s financial position was caused by the significant outflow of monetary funds belonging to corporate and retail customers triggered, among other things, by information attacks in social networks.

At the start of liquidity squeeze, the bank managed to honour its obligations by selling its liquid assets. Further out, the asset selling was hampered by the bank’s participation in the financing of a large investment project at enterprises controlled by the bank’s head.

The size of financing for this project was three times the size of the equity capital of the bank, however the bank masked this fact by using various schemes involving shell companies. As a result, considerable funds of creditors and depositors turned out to be immobilised in the form of zero-yielding long-term investment, and the implementation of the investment project slowed down because of financing deficit.

The moratorium imposed on servicing debt obligations will help the provisional administration to control the situation at the bank, and it will also allow the Bank of Russia to make a decision on bank’s future with due regard to the interests of socially important enterprises credited by the bank.

Pursuant to Federal Law No. 177-FZ, dated 23 December 2003, ‘On the Insurance of Household Deposits with Russian Banks’ the moratorium on meeting bank creditors’ claims is an insured event. Payments to JSCB Spurt (PJSC) depositors, including individual entrepreneurs, will start no later than 14 days since the date the moratorium has been imposed. The Agency will determine the procedure for paying out insurance indemnities.

After the Agency pays out insurance indemnities to retail customers, the size of the bank’s unsettled debt obligations will be negligible.

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