On revocation of banking licence from CONFIDENCE BANK and appointment of provisional administration
By Order No. OD-936, dated 13 April 2018, effective from the same date, the Bank of Russia revoked the banking licence of the Kostroma-based credit institution Limited Liability Company Commercial Bank CONFIDENCE BANK (Registration No. 970), further referred to as the credit institution. According to the financial statements, as of 1 April 2018, the credit institution ranked 271st by assets in the Russian banking system.
Problems in the credit institution’s operations owe their origin to the use of a risky business model focused on loans to companies related to the credit institution’s management, which resulted in multiple low-quality assets building up on its balance sheet. The due diligence check of credit risk at the regulator’s request established a substantial loss of capital and entailed the need for action to prevent the credit institution’s insolvency (bankruptcy); there arose a real threat to its creditors’ and depositors’ interests.
The credit institution failed to comply with the requirements of the legislation and Bank of Russia regulations on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism with regard to the provision to the authorised body of required data on operations subject to obligatory control and the identification of its customers’ beneficiaries. Besides, the credit institution conducted dubious transit operations.
The Bank of Russia repeatedly applied supervisory measures against the credit institution, including four impositions of restrictions on household deposit taking.
The management and owners of the bank failed to take any effective measures to normalise its activities. Under the circumstances the Bank of Russia took the decision to withdraw the credit institution from the banking services market.
The Bank of Russia took this measure following the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within a year of the requirements stipulated by Article 7 (excluding Clause 3 of Article 7) of the Federal Law ’On Countering the Legalisation (Laundering) of Criminally Obtained Incomes and the Financing of Terrorism’ as well as Bank of Russia regulations issued in accordance with the said law and application of the measures stipulated by the Federal Law ’On the Central Bank of the Russian Federation (Bank of Russia)’, taking into account a real threat to the interests of creditors.
By its Order No. OD-937, dated 13 April 2018, the Bank of Russia appointed a provisional administration to the credit institution for the period until the appointment of a receiver pursuant to the Federal Law ‘On Insolvency (Bankruptcy)’ 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 have been suspended.
The credit institution is a member of the deposit insurance system. The revocation of the banking licence is an insured event as stipulated by Federal Law No.
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