On revocation of banking licence of credit institution Economic Union Bank and appointment of provisional administration

By its Order No. OD-628, dated 13 March 2017, the Bank of Russia revoked the banking licence of the Moscow-based credit institution Economic Union Bank (Joint-stock Company), Economic Union Bank JSC (Registration No. 2798, the city of Moscow) from 13 March 2017.

The Bank of Russia took such an extreme measure — revocation of the banking licence — because of the credit institution’s failure to comply with federal banking laws and Bank of Russia regulations, inability to satisfy its creditors’ claims on monetary liabilities, and taking into account the repeated application within a year of measures envisaged by the Federal Law ‘On the Central Bank of the Russian Federation (Bank of Russia)’.

Economic Union Bank JSC failed to adequately assess the risks assumed as the quality of assets was bad. Due to the low quality of assets, the credit institution failed to timely honour its obligations to creditors. Besides, the bank was involved in payable-through operations, and also dubious operations, connected with the withdrawing of assets abroad.

The management and owners of the bank have not taken measures required to normalise its activities. 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’.

By its Order No. OD-629, dated 13 March 2017, the Bank of Russia has appointed a provisional administration to Economic Union Bank JSC for the period until the appointment of a receiver pursuant to the Federal Law ‘On the 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 are suspended.

Economic Union Bank JSC is a member of the deposit insurance system. The revocation of the banking licence is an insured event as stipulated by Federal Law No. 177-FZ ‘On the Insurance of Household Deposits with Russian Banks’ in respect of the bank’s retail deposit obligations, as defined by law. The said Federal Law provides for the payment of insurance benefits to the bank’s depositors, including individual entrepreneurs, in the amount of 100% of the balance of funds but no more than 1.4 million rubles per one depositor.

According to the financial statements, as of 1 February 2017, Economic Union Bank JSC ranked 367^th by assets in the Russian banking system.

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