Banking licence of East-Siberian Transport Commercial Bank revoked and provisional administration appointed
By Order No. OD-2715, dated 19.10.2018, the Bank of Russia revoked the banking licence of the Irkutsk-based credit institution Joint-stock Company East-Siberian Transport Commercial Bank (hereinafter, the Bank) (Registration No. 2731) from 19 October 2018. According to financial statements, as of 1 October 2018, the credit institution ranked 305th by assets in the Russian banking system; its impact on the aggregate indices of the banking sector of the Irkutsk Region was negligible.
The Bank suffered the problems caused by insufficient equity capital and the lack of sources to increase it to cover losses related to the low-quality credit portfolio. Therefore, the Bank was involved for a long time in opaque transactions to maintain the equity capital and comply with prudential requirements in a formal way. Moreover, the credit institution conducted fictitious operations to conceal the shortage of funds in tills and divert highly liquid assets in the amount of over 130 million rubles to the detriment of creditors and depositors. Creation of the required loss provisions for actually missing assets at the request of the supervisory authority revealed the loss of the Bank’s equity capital by 98% and the decline in the credit institution’s capital adequacy ratios to critical values.
The management and owners of the credit institution did not take proper actions to bring its activities back to normal. The Bank of Russia will submit information about the transactions conducted by the Bank bearing signs of a criminal offence to law enforcement agencies.
The Bank of Russia repeatedly (9 times over the last 12 months) applied supervisory measures against the Bank, including two impositions of restrictions on household deposit taking.
Under these circumstances, the Bank of Russia performed its duty on the revocation of the banking licence of the credit institution in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.
The Bank of Russia took such an extreme measure because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, equity capital adequacy ratios below two per cent, and given the repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
Following banking licence revocation, the Bank’s professional securities market participant licence was cancelled.
By its Order No. OD-2716, dated 19.10.2018, the Bank of Russia has appointed a provisional administration to Joint-stock Company East-Siberian Transport Commercial Bank 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 were suspended.
Joint-stock Company East-Siberian Transport Commercial Bank 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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