On the results of due diligence of OJSC FRB conducted by the provisional administration

The provisional administration of OJSC FRB appointed by Bank of Russia Order No. OD-911, dated 5 May 2014, due to the revocation of its banking licence, established in the course of due diligence of the credit institution that the value of assets of OJSC FRB amounted to less than 16.5 billion rubles with liabilities to creditors amounting to 32.7 billion rubles.

Besides, the provisional administration established signs of bogus activity of the majority of borrowers that may indicate that lending to these entities was determined not by the real economic activity, but served the interests of former management and owners of OJSC FRB. As a result, in accordance with the financial statements submitted by the former management to the provisional administration the value of loan portfolio amounted to 31.0 billion rubles. The value of loan portfolio determined by the provisional administration in the course of due diligence amounted to 12.7 billion rubles.

The provisional administration established the facts of sales and assignment of collectable assets without actual cash receipt in the amount of 3.1 billion rubles shortly before the licence revocation.

At the same time, when compiling a register of liabilities of OJSC FRB to depositors it was established that shortly before the licence revocation when the bank experienced solvency problems it implemented mass transactions to transform creditors’ claims on monetary liabilities to a more privileged order of their implementation and splitted household deposits in order to decrease their amount to the maximum acceptable level of insurance compensation. As a result of the above-mentioned operations liabilities to households in the total amount of 515.3 million rubles subject to insurance compensation were accumulated.

In these circumstances, on 27 June 2014, the Arbitration Court of the city of Moscow adjudicated to recognise OJSC FRB as insolvent (bankrupt) and to initiate bankruptcy proceedings. The state corporation Deposit Insurance Agency has been appointed as a receiver.

The Bank of Russia submitted the information on financial transactions bearing the evidence of the criminal offence conducted by the former management and owners of OJSC FRB to the General Prosecutor’s Office of the Russian Federation and the Ministry of Internal Affairs of the Russian Federation for consideration and procedural decision making.

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