On revocation of banking licence and appointment of provisional administration
By its Order No. OD-2647, dated 30 September 2014, the Bank of Russia revoked the banking licence from the Makhachkala-based credit institution COMMERCIAL BANK ESID, LIMITED LIABILITY COMPANY, or ESIDBANK LLC (Registration No. 1991) from 30 September 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, revealed facts of significant unreliability of the reporting data, repeated violations within a year of the requirements of Articles 6 and 7 (except for Clause 3 of Article 7) of the Federal Law ‘On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’, capital adequacy below 2%, decrease in equity (capital) below the minimal amount of the authoruised capital established by the Bank of Russia as of the date of the state registration of the credit institution, inability to meet the creditors’ claims on monetary liabilities and application of supervisory measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’. In these circumstances, pursuant to Article 20 of the Federal Law ‘On Banks and Banking Activities’, the Bank of Russia revoked the banking licence from ESIDBANK LLC.
The Bank implemented high-risk lending policy connected with placement of funds into low-quality assets. As a result of meeting the supervisor’s requirements on creating provisions adequate to the risks assumed, the credit institution lost its equity (capital). Due to the loss of liquidity, ESIDBANK LLC failed to timely honour its liabilities to creditors and depositors. Besides, the financial statements of the credit institution did not reflect in full the information on the unmet claims of creditors and depositors indicating its significant unreliability. The management and owners of the bank did not take measures to normalise its activities and recover its financial status.
The bank did not comply with the requirements of the legislation on anti-money laundering and the financing of terrorism in terms of appropriate identification of its customers and timely notification of the authorised body about operations subject to obligatory control. During 2013, ESIDBANK LLC was involved in dubious cash transactions in the total amount of about 2 billion rubles.
By its Order No. OD-2648, dated 30 September 2014, the Bank of Russia has appointed a provisional administration to ESIDBANK LLC for the period until the appointment of a receiver pursuant to the Federal Law ‘On the Insolvency (Bankruptcy) of Credit Institutions’ 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.
ESIDBANK LLC is a member of the deposit insurance system. The revocation of banking licence is an insured event envisaged by Federal Law No.
As of 1 September 2014, ESIDBANK LLC ranked 693rd by assets in the Russian banking system.
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30.09.2014 00.00.00