Banking licence of JSCB APABANK revoked
By its Order No. OD-166, dated 31 January 2020, the Bank of Russia revoked a banking licence from the Moscow-based credit institution Agrarian Trade Union Joint-stock Commercial Bank APABANK (Closed Joint-stock Company) JSCB APABANK (Registration No. 2404, hereinafter, APABANK). The credit institution ranked 369th by assets in the Russian banking system.1 The bank is not a member of the deposit insurance system.
The Bank of Russia took this decision in accordance with Clause 6, Part 1, Article 20 of the Federal Law ‘On Banks and Banking Activities’,2 based on the facts that APABANK:
- understated the amount of provisions to be set up and overstated the value of assets in order to improve its financial indicators and conceal its actual financial standing. Credit risks assumed by the credit institution and the real value of immovable property recorded in the balance sheet at the Bank of Russia’s request revealed a decrease (over 40%) in the credit institution’s capital, which is a real threat to its creditors’ interests;
- violated federal banking laws and Bank of Russia regulations, making the regulator repeatedly apply supervisory measures over the last 12 months.
Over 70% of the loan portfolio of APABANK represent bad loans. The Bank of Russia repeatedly sent the credit institution orders to make a proper assessment of risks assumed and to reflect its real financial standing in the financial statements. Compliance with the supervisor’s requests led to reasonable grounds for taking measures to prevent the credit institution’s insolvency (bankruptcy), which created a real threat to the interests of its creditors.
The Bank of Russia also cancelled APABANK’s professional securities market participant licence.
The Bank of Russia appointed a provisional administration to APABANK3 for the period until the appointment of a receiver4 or a liquidator.5 In accordance with federal laws, the powers of the credit institution’s executive bodies were suspended.
1 According to the financial statements as of 1 January 2020.
2 The Bank of Russia takes this extreme measure because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, 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)’, considering a real threat to the creditors’ interests.
3 In accordance with Bank of Russia Order No. OD-167, dated 31 January 2020.
4 In accordance with Articles 127 and 189.68 of the Federal Law ‘On Insolvency (Bankruptcy)’.
5 In accordance with Article 23.1 of the Federal Law ‘On Banks and Banking Activities’.
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