On revocation of banking licence from Northern Credit bank and appointment of provisional administration
By its Order No. OD-3754, dated 29 December 2017, the Bank of Russia revoked the banking licence from the Vologda-based credit institution joint-stock company commercial bank Northern Credit or JSC CB Northern Credit (Registration No. 2398) from 29 December 2017. According to the financial statements, as of 1 December 2017, the credit institution ranked 244th by assets in the Russian banking system.
The Bank of Russia’s inspection of JSC CB Northern Credit revealed that the bank had no primary documents confirming its rights of property for a large securities portfolio bought in late December 2017. The due assessment of the risk assumed under the said deal revealed a complete decapitalisation of the credit institution.
The securities purchase agreement was signed by an acting head of the credit institution and bears signs of a dubious transaction. Thereby, the unfair practice of the management of JSC CB Northern Credit aimed at a large-scale asset diversion triggered collapse of the financial institution. The Bank of Russia will submit the information about these facts bearing signs of a criminal offence to law enforcement agencies.
Due to the liquidity strain in the last ten days of December 2017 the bank failed to timely honour its liabilities to creditors and depositors.
Besides, Bank JSC CB Northern Credit failed to comply with laws on countering the legalisation (laundering) of criminally obtained incomes and the financing of terrorism, including the notification of the authorised body about operations subject to obligatory control.
The Bank of Russia repeatedly applied supervisory measures to JSC CB Northern Credit, 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 from JSC CB Northern Credit in accordance with Article 20 of the Federal Law ‘On Banks and Banking Activities’.
The Bank of Russia took this decision because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, repeated violations within one year of Bank of Russia requirements stipulated by Articles 6 and 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’, equity capital adequacy ratios below 2 per cent, decrease in bank equity capital below the minimum value of the authorised capital established by the Bank of Russia as of the date of the state registration of the credit institution, due to repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.
By its Order No. OD-3755, dated 29 December 2017, the Bank of Russia appointed a provisional administration to JSC CB Northern Credit 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.
JSC CB Northern Credit 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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